Yesterday, I went to have my usual breakfast in the neighbourhood coffee shop and ordered a fried kuey teow and a glass of coffee.
I gave RM3.50 to the waitress who had brought me the plate of kuey teow, but surprisingly she told me I was short of 30 cents - it's now RM3.80 per plate. Just one week ago, it was RM3.50. This is an increase of 8.5%.
An old pensioner in the next table told me that his plate of wantan mee also cost RM3.80 now. Apparently, the hawkers in Petaling Jaya have all raised their prices, even before an expected adjustment in petrol prices and electricity tariffs, as predicted by the numerous articles and letters in Malaysiakini.
The old pensioner told me that he usually eats out every morning. So for the poor old man, his saving of RM38,000 in the bank is suddenly worth about RM35,000 in purchasing power. For a person earning a salary of RM3,800, his pay is now equivalent to RM3,500 - meaning that the worker has in fact taken a pay cut without realising it.
For the businessmen and hawkers who increase their prices, it may not necessarily mean that they will increase their income. By pricing their products higher due to higher costs, there will inevitably be fewer buyers. People will eat out less often if they find that their disposable income is shrinking. So even those who raise their prices may not earn higher to offset the higher costs.
In the end, everyone is affected. These are the grim effects of inflation. Inflation is like robbery by taking away the value of our money. It is also like taking a pay cut when our earning power actually decreases.
The sad thing is we can't really do anything about it because this time it is mainly due to external factors.
The best way to counter inflation as a nation is to increase growth - to ensure that those earning RM3,800 a month can now be paid RM4,200. But with economic growth stagnating, it is just not possible for employers to raise pay for their employees.
Even with good growth, the old and the retired, with their savings earning a pittance in the banks, (RM38,000 in the bank will earn you RM1,330 a year based on 3.5% interest per annum) will still be badly hit. These groups will have to rely on the government or the caring public to survive.
We need to tighten our belts, especially those of us living in urban and suburban areas. For the government, it is time to cut wastage, increase efficiency, increase growth, check corruption (corruption leads to wastage of funds) and cut down on grandiose projects.