One crypto post, one-non crypto post. We all need some balance in life, eh?
Headline Inflation Numbers
You probably have seen them. 6.2% in the US, 4.2% in the UK and about 2% in Singapore. Alarm bells ringing because it is not supposed to be this high, despite the money printing.
Terms like “unexpected”, “transitory” being ushered around to placate the masses. “Unexpected” so that the people in charge would not have to put their hands up and declare “We screwed it up…… so savers are screwed”
“Transitory” just means that prices might stabilise in 2022. Nope, prices would certainly not come back down to pre-pandemic levels, but maybe the *increases* might not be that bad?
Anyway, my take is that the reported numbers are more than likely to be artificially muted. Because even if the situation is exactly the same, double digit inflation numbers in developed countries could lead to social unrest and protests.
First, inflation does not account for smaller portions or reduction in quality. Second, calculations are done only for a basic basket of goods. Not sure how realistic that is. For example, in Singapore, core inflation does not account for housing and car prices even though they can easily make up >50% of a household’s expenditure.
Honestly, your own inflation numbers matter more than the headline, if you do not already know that.
Personal Inflation Rate
I actually estimate it to be around 10% p.a. for each of the past two years. So 20% in total and if my networth has not increased as much, my purchasing power would have declined and I might as well say bye bye to a comfortable and early FI.
Interestingly, total expenses have not increased. Why? Because no travel.
I really think the middle class will only feel the inflation numbers when travel lanes fully open.
Food and Groceries:
- My favorite fried rice with pork chop (food centre setting) in Punggol increased its price from $7 to $8 overnight two months ago.
- Horfun dish in a restaurant maintained its pricing but reduced the size of its clams and introduced frozen prawns. Yikes!
- Fresh prawns prices increased from $15 to $18 in recent months
- White corn prices increased from $2.50 to $3. Most fresh vegetables in wet markets experienced 30% price increases.
Appliances:
- I have been shopping for household appliances for close to two years. Why? Some of them are ageing and I have nothing better to do in malls after meals. So I check out appliances
- We had our eyes on a specific fridge almost exactly a year ago. A friend listened to our recommendation and bought it for around $1,250. The past month, the best price for the exact same model was $1,400.
- A replacement stove ($450) and a washing machine ($1,100) was also bought
I will admit that for the very basic models, inflation has been moderate or even reasonable. Probably <5% p.a.
But my preference is not to be scrapping at the bottom of the barrel. especially if given a choice. Compared to 9 years ago, I am spending >50% more to purchase both my refrigerator and washing machine.
And then there are other basic needs like electricity and water which are seeing 10% inflation. We have not even talked about aspirational goods like condos, cars, Rolexes and Chanel bags. Not to mention about big-ticket items like houses and cars.
20% p.a. inflation for these increasingly-out-of-reach stuff?
If I am now starting out in my early or mid twenties (have not locked in on a HDB), all these price increases would likely exert a huge mental toll or burden.
“Would my future actually be brighter than my less-educated parents? If not, what did I work so hard for?”
One can only hope that tech innovations and improvement help to suppress the effects of money printing.
Or take things into one’s own hands and try to inflate your net worth so fast that all these inflation numbers become a drop in the ocean.
Thanks for reading.
