The Dangers of Inflation
Inflation is the gradual loss of purchasing power, reflected in a broad rise in prices for goods and services. It reflects an increased cost of living in a country, causing reduced freedom in spending, fewer savings, and loss of goods and services.
The world is going through a global recession and a steep decline in business activities, leading to universal problems and dangers. People are fighting to stay healthy, physically and mentally. But what are the different problems people face due to inflation?
First, let’s take New York, one of the wealthiest cities in the world and ranked by the The Global Financial Centres Index as the world’s financial capital. Inflation was at a record high of 8.6%, and with New York being one of the most expensive cities, people have a hard time keeping up. In a recent report, Valerie Betton, mother of two who is struggling to live with rising prices, said, “It’s crazy expensive. I can’t even eat like I used to. So I’m losing a lot of weight, because you have to change your eating habits.” People are on a budget, and one in three households have less than $100 in savings. The money that people save for retirement, college, trips, housing and more, have been forced out of their pockets on daily expenses such as taxes, food, and rent.
Due to inflation, the number of homeless people has also increased drastically and unexpectedly.
The rising housing costs, combined with a climb in price of gas and food, have left an increasing number of homeless Americains as well as millions fearing they’ll soon be evicted.
The shelters are reporting a growth in people struggling to afford basic necessities.
According to the Washington Post, Jossanne English got evicted from her apartment in Sacramento, California. She claims, “I made good money — last year I made almost $100,000 — and I can’t believe this happened to me,” she said. “But with prices the way they are, it can literally happen to anybody.”
Inflation impacted Americans much more than people think, ruining lives, putting people on the street, and minimizing customers’ purchasing power.
In other countries, like Kenya, inflation can cause even more severe problems. In Kibera, one of the poorest areas in Kenya, for example, the principal issue has been the increase in the prices of food. People in Kibera can’t afford more than what they were paying, and don’t have the financial freedom that most Americans have. Inflation has led to a crisis throughout the population of Nairobi.
The price of Kenya’s staple food, maize, is the most worrying. In recent reports of the DW, Josephine Otuga, a Kenyan owning her kiosk in Kibera, talks about how difficult life has become for her without being able to access basic ingredients. She says: “You can take tea without sugar, you can make greens without cooking oil, but there is no substitute for Ugali,” referring to Kenya’s staple food made from maize.
The price has drastically increased due to many factors: 0.89$ per kg in 2018 and 1.69$ per kg in 2021. First, the COVID-19 pandemic affected both production of food and inputs for production. In addition, Kenya is experiencing one of the worst droughts registered in the past four decades. The weather phenomenon of “La Niña” has hit central, eastern and northern regions of Kenya, resulting in 4.3 million Kenyans needing food assistance. Finally, the Russian war in Ukraine affected the supply of grains and fertilizer. In 2015, potassium chloride was priced at around 300$ per metric ton and escalated to 1200$ per metric ton in April 2022. These problems have occurred simultaneously, resulting in a more severe situation.
Nutritionists recommend eating three meals per day, but for the people of Kibera, this is a luxury they can no longer afford, and many are compelled to skip one meal in order to have the other.
As reported by the BBC, Nikhil Hira, a tax expert in Nairobi, “There is no doubt that today, the cost of living has spiraled beyond control. And it’s particularly difficult for those who live on a daily wage, and without that daily wage cannot eat at night.”
It’s even worse outside the city. A prolonged drought in the northern part of the country has left an estimated 2.8 million people facing severe hunger. Because of the high prices, the people now don’t have the possibility to eat every day. Kids are hungry, workers lose energy, and their world is slowly crumbling.
Food prices aren’t the only ones rising. Fuel prices have skyrocketed, meaning people will have to dig deeper into their empty pockets. One of the reasons for this increase is high demand for low supply. After the Russian invasion of Ukraine, many countries hampered Russia’s ability to sell crude oil. Being one of the world’s dominant sellers, Russia’s seclusion has created considerable changes in people’s lives. U.S. gas prices increased by 42%, from 1.48$ a gallon to 5.02$ between the day before Russia’s invasion a year ago. The record high price of gas was reached on June 14 2022.
From that day, however, the price has been steadily declining. Moreover, in 2022, US drivers spent 528$ billion on gasoline, which is 120$ billion over their 2021 number. This increase works out to around 900$ extra per US household.
Lives throughout the world have been affected by rising prices, and despite the positive energy everyone is trying to sustain, inflation is not making it easy.
