Voices In The Crowd: Inflation and Prices

This month's Voices in the Crowd covers the impact of inflation and price raises in everyday life. We spoke to several people across the world from the United States to Japan and between to see how they have impacted by this raise in prices and what they think is the root cause behind it.

(1) How much have you felt the impact of raising prices in your daily life?

Heiwa, mid 20’s, from Japan: I have been feeling the rising prices lately especially as the price of food has been rising.

Furaha, mid 20’s, from Kenya: The impact of raising prices in my daily life hasn’t been so great. There has been a small impact especially in the price of oil. These days in Kenya, where I am from, the price of oil has risen and there is a shortage in the supply of fuel. This means when you get to most gas stations here there is a queue line for gas. You find about 20 cars in line waiting for gas. So yeah, it has impacted my daily life quite dramatically but not in every aspect.

Stefan, mid 20’s, from Bulgaria: Substantially. It is not about one thing, though. Generally, you can just afford less stuff.

Joey, mid 20’s, from the US: The question of inflation is a really big question that affects our understanding of the global climate. As I understand it, inflation is often pegged as the price of a gallon of milk or gasoline, these being widespreadly used commodities. In European countries, I know that the price of milk and bread is supplemented by the government to control its costs. If the cost of these basic commodities goes up then the price of everything else goes up.

I have noticed inflation in my life when in school there was a hot lunch program and I remember when it was available for $2.75 and over the years it went up to $3.75. There was one day when it was $4.00 and everyone was going crazy. By the time I left school, it went up to $5 and $6 as it rose in increments of a dollar. Today, as I last learned, lunch at the same school costs $15.00. This is the trend within the last ten years.

I have definitely felt the impact of inflation especially when it comes to the price of food. Now I just went to Israel and remember that if you want to get a gourmet cappuccino and get one at a specialty coffee place that 12 shekels was the ceiling for what it would cost. But all of a sudden this time when I went, they had raised the price to 14 shekels. That is a very dramatic increase in the price for a very basic commoditized drink in a country whose food is already very expensive. This trickles down to everything else you are purchasing and raises the cost.

I read about inflation in the news and how it affects the minimum wage. Now there is a joke that if you were a failure in life for flipping burgers at McDonald’s for a dollar an hour but today you can flip burgers at McDonald’s for $20 a hour it is not so bad. When you consider how much inflation is rising, $20 does not get as far in life as it once did anymore.

Karl, mid 20’s, from Sweden: I've felt it but not in a way that really forced me to change any habits.

Chamil, mid 30’s, from Sri Lanka: A lot, everything has gone up almost 25%.

Sammy, mid 20’s, from Chile: The rise in the price of food and oil has made everyday life more difficult and expensive.

Aaron, mid 20’s, from New York: So I'm currently married, with no kids and thank God, disposable income so I haven't really felt the hurt from the rising prices, I've been by pretty well.

(2) Which items have you noticed the most dramatic jump in prices?

Furaha, mid 20’s, from Kenya: Oil is the item which has had the most dramatic jump in prices.

Sammy, mid 20’s, from Chile: In the price of food and oil.

Heiwa, mid 20’s, from Japan: Food and Gas. The biggest snack companies in Japan announced they will be raising the prices of their snacks by 3%-11%.

Karl, mid 20’s, from Sweden: The driving force for inflation has been the rising energy prices, in Sweden its mostly gas prices affected. That's where you really felt the inflation.

Chamil, mid 30’s, from Sri Lanka: All food, rice, sugar, coconut oil and dhall.The All Ceylon Bakery Owners' Association states that they have received information that the wheat flour companies are preparing to increase the price of a kilo of wheat flour by another 50 rupees.Wheat flour companies have already recently increased the price of a kilo of wheat flour by Rs. 35 recently. The price of a kilo of wheat flour is around Rs. 180 these days, said the President of the All Ceylon Bakery Owners' Association, NK. Jayawardena said.He added that the price of a kilo of cake had to be increased to Rs. 1,000 due to the increase in the price of bakery ingredients and also said bakery products, including bread, have dropped by 50 percent and many small bakeries have closed by now.

Aaron, mid 20’s from New York: Gas has definitely been the biggest thing I've noticed jump up dramatically. It's jumped $1.50 since 2 years ago, it's insane.

Joey, mid 20’s, from the US: The classical definition of inflation is when the cost of goods go up. I ran a business where we were subject to the cost of goods going up and that trickled down to the cost of the product. We were selling a product that was paper based and all the prices during Covid went up. So the cost of paper pulp went up, so did the cost of the box, cost of shipping went up, and because the cost of shipping went up the cost of importing that paper pulp went up. Just producing the cardboard that contains the product was now nearly twice as expensive as when we started the project. The only way we could stay in business was increasing the price of our product. We did so and thankfully our customers weren’t too bothered but we had some that dropped off. I imagine that to meet the rising costs, people are paid more. You see that money is a placeholder mechanism that rises with the arbitrary cost of goods.

Stefan, mid 20’s, from Bulgaria: Besides the obvious with fuel prices,oil has received a sharp increase. It feels like it has doubled or more in price. You used to pay 1-2 lev (0.5-1 euro) a liter and now you have the same sunflower oil at 5-6 lv. a litre (2.5-3 euro).

(3) What do you think is the biggest reason that is producing this problem?

Karl, mid 20’s, from Sweden: A combination of monetary policies following the corona pandemic that has increased the money supply. But I suspect the supply problems derived from both corona and the war have impacted inflation equally if not more. At least in Sweden, for example, factories have had great trouble throughout 2021 obtaining parts.

I think what will happen as a consequence of both Covid and Russia's actions is that nations will rethink their dependence on foreign countries. Moving production home is already on the agenda, this will also contribute to increased prices.

Inflation is now at 4.5% in Sweden, which will require an increase in the interest rates of mortgages. We are used to rates around 1-1.5% and when this goes up, this will be felt hard by homeowners. In Sweden, this is the weak spot, as we have quite high personal debt, so for many this will be the real challenge.

Stefan, mid 20’s, from Bulgaria: The war in Ukraine.

Aaron, mid 20’s from New York: The fact that in the beginning of 2021, Joe Biden sent out money to millions of Americans and still kept the economy shut down even though it should've been opened, put way too much money into the economy, with not enough goods being produced and that I believe is the primary cause, there was this huge injection of money into the economy that wasn't the result of actual economic production.

Furaha, mid 20’s, from Kenya: I think inflation and the war [in Ukraine] is the reason this is happening because it has caused a rise in the price of everyday goods, especially oil. I hear Ukraine has shares in oil or something like that.

Sammy, mid 20’s, from Chile: The main reason for the economic situation in my country is the social and political crisis of 2019 and the economic restrictions that happened as a result of the pandemic. Nowadays there is a great uncertainty in Chile caused by the laws enacted by the Constitutional Convention which is writing a new Constitution.

Joey, mid 20’s, from the US: The price of goods can climb when there is increased money in the supply, which we definitely have a huge amount of capital available all over the world, the supply and demand issue changes in a way that because so much demand but so much money available for the demand there are more people willing to pay for a shortening supply. During Covid when people were laid off and there was a huge worker shortage, the availability of goods altogether had already declined and this hasn’t been good for the cost of goods. On top of that, with government issuing bailouts, like the Canadian government does via CERB program where the unemployed could get $2,000 a month (or the US’s $600 stimulus checks), this is a tremendous amount of capital that is deployed to the economy that was only going to be used to fight over the same shortened supplies. This further drove the cost of supplies to rise. The government did this not only through stimulus checks but through the bailouts and PP loans.

I have a friend who helped small businesses apply for PP loans. He accumulated millions and millions of dollars in PP loans which benefited small and medium sized business owners who really didn’t need the capital. So the effect of just throwing money into the economy when it is not there to stabilize the price of basic commodities like our milk example is a great way to increase the price of commodities altogether and leads to inflation.

Heiwa, mid 20’s, from Japan: The biggest causes for this problem in Japan is the conflict in Ukraine and the Japanese Yen becoming weaker against the US dollar as a result of the rise of interest rates in the US.

Chamil, mid 30’s, from Sri Lanka: The main reason for this situation is the poor governance of the Sri Lankan government. The people of the country have been greatly inconvenienced due to the decisions taken by the government including President Gotabhaya Rajapaksa who was elected in 2019. Fuel crisis in the country, rising prices of essential commodities, lack of fertilizer for agriculture, ban on import of essential commodities, power cuts most of the day, arbitrary foreign borrowing, misappropriation of rupee (printing in large quantities in a short period of time).The lack of a control price for commodities can be cited as another reason. Also, the current President's closest relatives hold high positions in the existing government to carry out family rule and bestow high positions in the country to close friends, people who are often without the right qualification. They have been together for a long time and have swindled a lot of money. Due to the financial crisis in the country, the people are being heavily taxed. It has made people very helpless.