Why have we stopped questioning inflation?
As I stand here petrol nozzle in hand watching my children’s inheritance evaporate away like the fumes of my tank, I can’t help but wonder what’s changed over the past few years to have made people so accepting of extortionate inflation. I reach for a small bottle of Sprite with the price ‘£1’ splashed all over the label like it’s a multi-buy, like it’s a good deal. It may be a good deal by today’s standards, but it’s by no means a good deal compared to the price 10 years ago. In fact this tiny bottle of fizzy pop is over 40% more expensive than it was then. I’m thinking of the days when a small bottle of fizzy branded pop cost around 69p – I hope my maths is right, it’s quite late – and you could buy a mars bar to accompany your unhealthy sugary drink for around 40p but even that seemed expensive at the time.
What about fuel prices. I remember all too clearly a day when the amount of litres I was getting in my weekly tank fill up, far outweighed the number of pounds I was spending. As I filled up my tank today and glanced at the meter I almost fell over to see the cost of unleaded fuel at 137.9p a litre. According to this great chart I’ve just found, only 10 years ago it was around 70 pence a litre. That’s a rise of almost 100% in under a decade!
So what has changed in people to make us now accept these high prices as being normal, when not that long ago we’d have had fuel tanker strikes or lorry driver strikes if fuel prices went anywhere near the £1 a litre mark?
Our seeming acceptance of higher prices was also mentioned recently on Bloomberg in relation to oil prices. When oil first hit $100 a barrel there was genuine fear that $100 oil had the potential to collapse the economy and financial experts were out in voice to proclaim that fact. We’re are now back above that $100 a barrel oil mark but people don’t seem to be flinching. What’s changed?
Maybe we’re beginning to accept the price rises as inevitable or perhaps many of us are just content with having employment and don’t want to rock the boat when it comes to salary demands. One thing is for sure though, prices have risen drastically over the past 10 years and we don’t seem to be questioning those price increases as much as we used to. When you think about your own circumstances ask yourself ‘Has my salary or income risen by 100%, 80% even 30% over the last 10 years?’ For many this will not be the case, quite a few people have even seen their incomes decline in real terms.
Low interest rates have softened the blow of inflation for some but record low rates can’t last forever or they will only worsen the problem. So in this new overly inflated world in which we all live and have come to accept, my question is this. At what point will the cost of inflation once again become unacceptable to you? At what level will society again begin to question these price rises and consider them to be unacceptable? As someone who has an interest in economics, I’ll be very interested to see those questions answered in the coming years.
It’s Friday so it’s also time for our best of the rest roundup from around the web this week!
Young Adult Money ~ How Cost of Living Impacts Finances and Lifestyle
Canadian Budget Binder ~ A parking lot scam for money gone wrong
Frugal Rules ~ Saying Good-Bye to the Spender and Hello to the Saver
My Own Advisor ~ 3 personal finance lessons learned from Detroit’s bankruptcy
Mom and Dad Money ~ How to Negotiate a Lower Bill
Girl Meets Debt ~ My Free Date Turned Expensive
The Money Principle ~ Focus on money may be ruining your life…
Reach Financial Independence ~ New challenge: Live off online income
Modest Money ~ An In depth review of Credit Sesame