Women’s and men’s health magazines are in an all-out thrust to embrace the age of 50. To do this, they are saying that many of the virtues of a 50-year-old are better if not equal to those of a person who is just 20 years old.
It seems a catch phrase and, if not totally believable, it’s great to think of oneself at 50 with the same punch as people of 20.
Not so the global economy. In monetary terms, 50 is the new 20 because of radical inflation which means there’s less money to go around. In other words, what you could buy for $20 five or 10 years ago, will now cost you $50.
The literal meaning of the word inflation is to blow up or get bigger. Inflation is a word which is particularly used in an economic context. The most common economic meaning of inflation is a reduction in the value of money (monetary depreciation). Prices thereby rise and after a while you can buy less with the same amount of money. The opposite of inflation is deflation. With this prices fall and your money therefore is worth more. We should be so lucky, right?
In the past 10 years global inflation has accelerated at a broad average of about 3.2%. But 2011 and 2012 saw bigger increases with 5.05% and 4.08% respectively. In 2015 inflation was 2.78% and the inflation prediction for 2020 is 3.17%. Bear in mind these increases are year upon year and have registered an average 3.3% increase since 2010.
Yet in contrast, the FAO reported falling food prices: “Abundant supplies in the face of a timid world demand and an appreciating dollar are the main reason for the general weakness that dominated food prices in 2015,” Abdolreza Abbassian, a senior economist at the FAO, said.
The report said this was despite the effects of El Nino, such as devastating drought in some parts of the world.
However, at home here in South Africa, drought has severely affected the country’s agricultural productivity capacity. The loss of maize exports and the move to import more, “ would result in a widening trade deficit, and an almost certain expectation that agricultural export revenue would drop,” a government report stated.
Inflation hits us hardest at the supermarket as food is an essential need. Statistics South Africa (StatsSA) measured a 5% increase in the cost of its benchmark food basket during 2015.
We can always do without another pair of shoes, but everybody needs to eat for basic survival.
A survey of four supermarkets in South Africa proved a price average increase of between 22 and almost 26% and in the worst case, a basket costing R820 ($56) compared to R652 ($45) in 2014, was up in percentage terms by 25.78%.
Meanwhile on the global front world food prices posted their biggest monthly increase of four yours in June, a surge in sugar prices mostly responsible. Most other foods were subsequently affected by the increase, the UN Food and Agricultural Agency said.
For this year‚ the South African Reserve Bank (SARB) said in late-January that local food price inflation was expected to rise to 11% y-o-y (year-on-year) in 2016-Q4 – the highest in five years – from 5.9% y-o-y recorded in December 2015, according to an article published by accounting firm KPMG.
“The SARB is clearly of the opinion that local manufacturers‚ wholesalers and retailers will be unable to continue stemming food price inflation‚ with the projected 11% y-o-y rise in food prices during the fourth quarter suggesting the fastest rate of food price inflation since the last quarter of 2011,” the article said.
The outcome does not look at all rosy for us. But don’t think of drowning you sorrows in several swigs of whiskey as those sin taxes don’t come light and are always the first to be hit by penalties in an ever shrinking disposable income.