Inflation

With the recent hike of petrol prices in the country, one of the inevitable result from it is: Inflation.

With a hike of 41% in petrol prices, no doubt the inflation rate in the country will also rise. Economist are predicting inflation rate of the country will rise to 5%. Not too bad considering there are also significant increase in rice prices. But what most of us didn't noticed is that, everyone's inflation rate is different. This 5% is not applied to every Malaysian in the country. This 5% is the average of the whole country.

That means, if you are living in the capital or big city, your inflation will definitely be more than 5%. Why? Actually you can actually measure your own inflation by jotting down your expenses for this year, and compare the amount with your expenses next year. A month by month comparison will be unnecessary as there will not be much of a difference between this month and next month. I now give an example on how to calculate.

Let's say you drink a cup of coffee everyday. The price now is RM1.00. For 365 days, you will spend RM365 / year. After this petrol hike, assuming the price increases RM0.20, so now the price for one cup is RM1.20. For 365 days, the cost is RM438, an increase of RM73. This increase is 20%, therefore your inflation is 20%, way above the national value of 5%.

This is just a single item example. If you add up your every expenses, more often that the percentage will be even higher, as normally prices of products keep going up!