Name: GUALBERTO, Roma P.

Course: BSED ENGLISH III

Prof.: Mark Vincent Aranas Date: December 06, 2022

INFLATION SURGE: DOES COMMON PEOPLE KNOW IT AND ITS EFFECT ON THEIR LIVES?

People often hear about inflation, a term mostly used in business and economics. Some people

do not understand how it works and how it affects our daily lives, so they simply ignore it. Inflation is

frequently regarded as a negative term that will cause financial hardship. But can we solve “inflation

surge” without appropriate knowledge of such term? By no means, people cannot. So, what is inflation?

Inflation is the general increase in prices across a country's economy. This is due to the continuous rise of

consumer demand for goods and services that exceeds what businesses and manufacturers can supply.

Comparatively, it also happens when employers agree to wage increases that exceed productivity profits,

and then make up for these wage increases by charging consumers higher prices for their products. In

some cases, the cost of a product may rise due to environmental or physical factors, such as when

COVID-19 pandemic happened that changed the supply chain distribution across the globe. The

purchasing power of money decreases as the cost of goods and services rises. During an inflationary

period, a given amount of money can buy less than it used to.

For example, a 5% salary increase may be granted to an employee. If prices remain stable, the

employee will be able to purchase 5% more goods and services. However, if prices rise by 5%, the

employee's purchasing power remains unchanged; however, if prices rise by 10% or more, the employee

will be unable to purchase as much as before. This is particularly difficult for employees on fixed incomes.

After reading and analyzing different concepts and articles, I have come up with four most stated

classification of inflation. Inflation can be classified as mild, moderate, severe, or hyperinflation. Mild

inflation occurs when for example, a company can pass on price increases to customers, and then

economy thrives; jobs are plentiful, and unemployment rates fall. "A risk in a growing economy is that it

grows too quickly." (Prentzas, 2013). If wages grow faster than prices, workers will have more purchasing

power. Unfortunately, this would only be temporary. Employers seek higher profits during periods of

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economic growth, while unions seek higher wages. This would cause prices to rise even further, resulting

in higher inflation. Consecutively, moderate inflation occurs when prices rise faster than wages, causing

purchasing power to fall. Most people would buy more then, because they want more goods and services

before prices rise even further. Price increases would eventually result from increased demand.

Severe inflation (or double-digit inflation) occurs when the annual rate of inflation exceeds double

the percentage in mild inflation. Prices are expected to rise faster than wages, implying that purchasing

power will fall even further. It can also reduce a country's output of goods and services by decreasing

demand from both domestic and foreign consumers as products become more expensive. Demand for

exports falls as other countries, as well as domestic consumers, look for cheaper alternatives. The worst-

case scenario is hyperinflation, which is characterized by uncontrolled and rapid inflation. It typically

occurs when a government coins money to support spending that is much greater than what it collects in

tax revenue, usually because it can no longer fund its budget deficit by selling bonds. The massive

amount of money being distributed would cause its value to plummet dramatically. When money loses its

value, it is no longer useful because many people trade goods and services rather than currency. Some

countries' economies suffered from hyperinflation during or after the war.

Since, inflation has a very wide scope of topics, let us focus on a nation setting. In the Philippines,

inflation is typically measured by the Consumer Price Index (CPI), a monthly detailed measure produced

by the Philippine Statistics Authority (PSA). It tracks the price changes of a representative group of

commonly purchased goods and services such as food, clothing, housing, medical care, and so on. As a

consumer, the lower the calculated number, the better. Unfortunately, global inflation is currently on the

rise. According to the Philippine Statistics Authority (PSA), inflation in the Philippines surged to 7.7

percent in October, the highest in 14 years and almost doubled the 4.0 percent a year earlier. According

to Reutes (2022) the Philippines Central Bank expects November annual inflation to be in a range of 7.4

percent to 8.2 percent, reflecting upward price pressures from electricity and agricultural products.

How did the Philippines' inflation rate surge into double of the last few years? The pandemic has

been compared to a war, albeit one against a disease rather than other humans, because, like a war, it is

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reshaping economies and requiring massive increases in public spending and monetary support. Inflation

can be beneficial to economic recovery, but it can also be harmful in some cases. Many people now

believe that high inflation is just around the corner, and that major economies will face spiraling prices.

According to The National, due to the global economy being hit by a coronavirus pandemic, inflation may

return sooner than expected, and most countries will face deflation. Moukarram Atassi, head of

investment management at the National Bank of Fujairah stated that rising inflation tends to work well

generally for tangible assets such as real estate, energy, precious metals, industrial metals and

commodities. Utilities and telecom companies will benefit, as will financials, consumer staples, and the

healthcare sector, which can pass on costs to customers. This will result in a spike in inflation. "Bitcoin is

also a beneficiary because trade wars cause people to seek a safe haven, including inflation, and if

inflation reigns in the future, its price will skyrocket," said Clem Chambers, founder of stocks and share

website Advfn.com. A surge in food demand may cause inflation because consumers are willing to pay

more for food since some countries issued a statement regarding Covid-19 lockdowns. Prices will rise as

consumers overspend and supply chains fall behind. Consumers will eventually return to "normal"

spending, and supply chains will heal.

To know the common people’s view of inflation, I asked several questions to random strangers.

When asked about some situations or experiences they have been through that has something to do with

crisis caused by inflation, Aling Gina answered that nowadays the salary of her husband is not sufficient

for a week’s budget due to the higher cost of products. In addition to this, she has two children who’s in

high school and a baby to feed. “Palaki na ng palaki ang gastos, ultimong sibuyas…ginto na ang presyo

ngayon. Baon pa ng mga bata at pagkain sa araw-araw. Kulang na kulang talaga.Dapat ang gobyerno

mapansin kaming mga mahihirap na naghihirap sa kabila ng matinding pagsisikap. Sila dapat ay

gumagawa rin ng mas mabisang paraan para yung presyo ng mga produkto ay bumaba.” , she

exclaimed. I also asked students if they knew inflation and below are their few statements:

“Inflation? Sa naaalala ko, pagtaas ng presyo ng mga bilihan, dahil na rin dumaan tayo sa

pandemic.”, student 1 said.

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 “In a phrase? Masakit sa bulsa. Lalo na sa mga studyante na tulad natin, mahal na nga ang

tuition, mahal pa ang mga bilihin. Ang hirap magbudget, lalo na sa mga tulad kong working

student”, student 2 said.

“Inflation is the increase of prices of products in the market due to higher demands. Ibig sabihin

kung tumataas ang demand ng isang produkto, tumataas din ang presyo ng mga bilihin.”, student

3 said.

In connection to this, in Barangay Kinatihan I, Candelaria, Quezon most tricycle drivers ask for 30

pesos fee each passenger. Sometimes, if you know the tricycle driver, they will give you a discount and

charge 25 pesos only. They would say, “Mahal na ang gasoline ngayon, saka wala namang ibinababa sa

amin na kailangan naming magbaba ng pamasahe.” But, if you would ask the residents of the said

barangay, the fee is actually double the fee before the pandemic happened. “Jusko, napakamahal na ng

presyo ng mga bilihin. Pagkakamahal pa ng pamasahe kahit malapit lang ang pupuntahan. Kapos na

kapos na nga sa panggastos. Di gaya dati na kahit mahirap ang buhay nakakabili ng mga bagay na

gusto. Ngayon kung ano yung pinaka-kailangan…yun ang mas pinagkakagastusan.”, one of them stated.

As I interviewed the common people, I have come to realize that inflation is like a virus. When it surges or

happens, it spreads and contaminates different aspects of society just like what virus do to the human

body. The different systems of the society where affected. The poor are the most vulnerable and the ones

who suffer the most. Inflation hurts the poor, and it hurts them for the rest of their lives and generations.

Inflation, in particular, forces the poor to spend almost their entire income on the most basic necessities of

survival, such as food, clothing, and shelter.

Because of the recent increase in inflation, I have observed that:

1. The poor cannot afford to spend money on their own or their children's education. This inability to

obtain qualifications/skill sets prevents them and their children from improving their earning

capacity/income levels, allowing them to at least partially offset the negative effects of inflation.

As a result, inflation stunts their growth and condemns them to poverty for generations.

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 2. The poor are unable to acquire or own any assets, preventing them from reaping the benefits of

inflation due to future increases in the value of these assets. On the other hand, inflation may,

and often does, push people to sell whatever tiny assets they have been holding in order to fulfill

their basic demands of life, negating any gains from earlier days and setting them backwards

economically by a few decades.

3. The poor cannot have the basic required nutrition, hygienic living environment and cannot have

basic needs as a result, they receive inadequate health care and are vulnerable to malnutrition

and disease. As a result, inflation condemns the poor to a life of poor health and living conditions.

4. Finally, as time passes, inflation gradually erodes the poor's ability to spend even on basic

necessities, robbing them of their human dignity by making them homeless and sometimes

forcing them to beg.

Inflation is bad. To be poor is worse. But the combination of both is the worst. If inflation

continues to rise, poor people would be more affected. If authorities don’t take action, possibly sooner the

nation will suffer. The economy will be more affected. The common people’s trust to government will

continue to lessen. The government must remember that the citizens are the foundation of a country.

They trusted political candidates for the hope of a better country.

As a result, the government should take into consideration different ways to control or eradicate

inflation surge. To keep inflation under control, the government would either reduce its budget deficit (the

amount by which a government's spending exceeds its revenue) or shrink the money supply. Most

governments use their money supply to try to control inflation, which is known as monetary policy. In the

Philippines, monetary policy refers to how the central bank, the Bangko Sentral ng Pilipinas, controls the

supply and availability of money, the cost of money, and the interest rate. Bangko Sentral can try to slow

the rate of inflation by raising interest rates on loans, encouraging people to spend less money and

allowing loaners to stop raising prices, allowing inflation to slow. The government may also follow fiscal

policy, which includes spending and taxing programs. These programs can be used by the government to

reduce the demand for goods and services. It can cut spending by buying less from businesses, which

reduces sales and leaves people with less money to spend. It can also reduce consumer income by

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raising taxes, causing them to spend less money, easing demand for goods and services, and causing

inflation to level off.

Wage and price controls established by the government to limit wage and price increases during

an inflationary period would be another way to combat inflation. Some economists believe that if the

government limits these increases, wages and prices will level off; others believe that controlling them

would be ineffective; and still others believe that controlling them would interfere with the natural rise and

fall of wages and prices. However, wage and price controls have been shown to be ineffective in

advanced economies. Inflationary pressures can cause erratic investment behavior. Prices typically send

out signals that assist individuals and businesses in making economic decisions that break down the

factors of production. People would not invest as much as before and would continue to speculate,

causing the economy to suffer. Inflation would cause a distortion in that process, causing people to

speculate (to buy things of enormous value in the hope that they would increase in value later on).

With wage increases slower than inflation, one may feel depressed as the cost-of-living rises.

Looking ahead, one should at least begin saving for future needs. We are currently experiencing mild to

moderate inflation, but it is not too late or too early to begin investing in your retirement or savings.

To conclude, inflation surge affects different aspects of our lives. Unfortunately, people at the

bottom of the society suffers the most. That is why it is important not just for the government to take

action but also the citizens. Inflation teaches people that their actions, although affected by different

circumstances, reflects and affects the way they live and will be in the future. Inflation surge is a major

problem for the society, especially in this post-pandemic society. It can cause someone’s education and

dreams to disappear. The stomach of the people was emptied due to insufficient income they get in their

works. More and more families ended up in the corner of the streets begging for money or food. Most

where affected, without knowing the real cause of such hardships they experience.

To common people, inflation is a word uncommon to them. But as what I have discovered, they

knew what the effects of inflation in their lives are, they just didn’t know that it is what inflation is. It is

important to explain to the common people what inflation is, for this is a big step to reduce or eradicate

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the negative effects of inflation. Remember, that Francis Bacon once said, “Knowledge is power.” The

more knowledge one acquires, the stronger one becomes. According to this saying, "real power comes

from knowledge." Without knowledge, no individual or nation can succeed in life. A knowing person has

the ability to predict the future and behave in a way that results in the intended outcome. Knowledge has

no bounds. There are no boundaries to what a person can learn. Even the most difficult problems can be

solved if we have the necessary knowledge. Man has conquered nature through scientific knowledge.

Knowledge, not physical strength, allows for development. Therefore, the first step in eradicating the

problems caused by inflation, is to gain more knowledge and then apply it to take action. Stop

complaining and start learning to take actions.

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REFERENCES:

PRENTZAS, G.S. (2013). How Interest Rates, Credit Ratings, and Lending Affect You. New York: Rossen

Publishing.

Summary Inflation Report Consumer Price Index (2018=100): October 2022 | Philippine Statistics

Authority (psa.gov.ph)

REUTERS (2022). Philippines Central Bank Sees November Inflation at 7.4-8.2%.

https://business.inquirer.net/375407/philippines-central-bank-sees-november-inflation-at-7-4-8-2

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