Inflation start. Spend now or save now?

Posted On 05/06/2008

Filed under Food for thoughts

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Thanks to people who votes Barisan Nasioanl. The sudden fuel hikes with ZERO efficiency policies guarantee an imminent inflation of goods price.

Now middle and low income group Malaysian share the same fear of Zimbabwe people : should you save money or just spend it?

The good news is, unlike Zimbabwe, Malaysia are “not so bad”, because there is a Pakatan rakyat government to prevent BN from implement “printing free money” as what Robert Mugabe choose to do.

Nevertheless, people will start flocking to hypermarket to pile up goods that likely to increase in price. And saving is not a good idea, because Ringgit will devalue against the goods price. Forget about how “strong” Ringgit against US$ Dollar, it is nonsense. Because more and more country choose to avoid trading in US$. Some choose to use EU , Pound sterling, Yen, and perhaps in future China Renmimbi.

Because Malaysia depends import heavily to make export, this has cause Malaysia currency weaken against other currency. That’s mean increase of goods price, because Malaysia didn’t import much food/sundries from US, but regional country.

It is difficult to know how good Malaysian is going to absorb the inflation after the fuel hikes, and perhaps the electricity hikes in near future. If things gone out of hand, Malaysia will risk enter an high inflation cycle, that might cause Malaysia more than RM 4 billions to “fix” it.

Again, I will keep my finger cross, and start spends more “future money” perhaps.

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