High global prices raise universal concerns
Global prices are reported to climb record highs as people across the globe lament increases in the cost of living. With soaring prices experienced in different parts of the world, global efforts to see a post-pandemic recovery may be frustrated by counter-growth experiences that limit the quality of livelihood for all.
Undoubtedly, inflation, which measures the level of prices across various consumption classes, is reported to be contributing to exaggerated prices of essential consumption commodities such as food, transport and utilities.
New research reported by the World Economic Forum (WEF) claims that more than two-thirds of the global populace suffer the effect of rising prices. More of the harshness is felt by the poor, whose ability to maintain a decent standard of living amid rising living costs is weakened by the current trend.
According to a survey carried out by a leading market research body, Ipsos, increasingly high living costs are being complained about, and this experience is observed in many countries worldwide. The survey observed responses from over 200,000 people across 30 countries and found out that not less than half the number of respondents lamented increases in the cost of clothing, shoes, housing, healthcare, and entertainment.
Among those surveyed, two-fifths of the population expect an increase in prices up to at least three more months relative to the time of the survey. This means that economic policies that should help slow down the rate of global overheating may not yield immediate results since there must be lags in the effect of economic policymaking.
Many experts believe that the current global trend accrues to the volatility in the oil market, as the single resource plays a major role in determining a host of other economic activities in most nations of the world. Oil price movements determine energy prices since many non-renewable energy sources that are in wide use are derived from oil. Hence, sudden changes in the price of this singular product will further determine prices along the value chain of the same.
Transportation is another major activity that depends on oil activities. Changes in the price of crude oil and other related products will be directly felt in the transport sector. When the cost of moving goods and people increases, there will be delays experienced along the distributive supply chain segment of the economy. Prolonged delays in the distribution of goods and services will hinder the smooth execution of economic transactions, and the result of this will be growth limiting.
Production delays due to shortages in the supply of raw materials or other intermediate products resulting from supply disruptions will affect output supply and prices accordingly. When output supply leans, the price of the scarce product will shoot up, thus, contributing to inflation.
According to the Ipsos survey, seven out of ten people around the globe lamented rising prices of gasoline, vehicle-related costs and maintenance, parking fees, public transportation fares, groceries, and food and restaurant expenses. This means that 70 percent of the global population are experiencing increases in the cost of their daily living, and they must either pay more to enjoy the same level of utility or recalibrate their spending budget to accommodate the new price reality.
Furthermore, two-thirds of the surveyed population exclaimed that they experience higher billing charges from gas, electricity, and water and internet subscription. 55 percent of the interviewed individuals across the various countries commented about the rising cost of clothing and shoes, while 51 percent of respondents pointed out that higher housing, medical and healthcare expenses are beginning to be overbearing. 49 percent of those interviewed decried increasing entertainment costs.
Normally, the more affluent in the society will choose to part away with more of their income to remain at the same level of satisfaction since they have relatively higher net wealth holdings than their poorer counterparts. However, the more impoverished individuals in society must rebalance their spending programmes, which means they must lower their living standards to accommodate the higher price regime accordingly.
In the US, for instance, the effect of rising prices on the poor have attracted the attention of the US Congress Joint Economic Committee, who reported in November 2021 that the lowest-earning US households spend 4.5 times more of their earnings on food and housing and 3.5 times more on public transport services than those in the top 20 percent. This disproportionate reality further exacerbates inequality concerns worldwide, but the effect is more pronounced in less developed countries.
Among world economies, the country with the greatest inflation concern among those interviewed, according to Reuters, is Argentina, whose official annual inflation rate rose to 52.5 percent in October 2021. However, countries with minor complaints among those surveyed were Japan (with consumer price inflation standing at 0.1% in October) and China, whose CPI stands at 1.5 percent for the same month.