To continue our look at the impact of inflation, I was reminded of a time I was in shop as a lady walked in with her two daughters. It was a relaxed jewellery store (I was waiting on my daughter, for the record). The oldest girl said, “I need this” to which the store owner calmly said to me: “She’s never ‘needed’ anything in her life, maybe at best to go to the loo”.
It was a poignant moment as I now look at the development of augmented reality and its future in the role of shopping. The child can take a photo of themselves and select the shoes some wannabe sell out ‘celebrity’ is wearing (please read that with the disdain intended). The augmented reality app places them on their feet, and they have the potential to walk around with them in virtual reality perhaps. Long, long sigh.
As we sit in our armchairs in our last few days looking backwards at how we lived our lives with nutrition, I’m confident more virtual reality shoe shopping will not make us sip that cup of tea with pride.
And therein lies one of the issues with the impact of inflation and the cost of living.
The impact of inflation
Oil accounts for around three per cent of the world’s GDP and is today still one of the most important commodities in the world.
Why? It’s in everything. Aspirin, yes aspirin. It’s a source of energy. It’s in tyres, plastics, fertilisers, clothes. You get it, everything.
When the consumer machine drives it home that you are not good enough unless you look like some celebrity you wouldn’t let into the local bakers, you are in trouble. My mother, rest her soul, would have clouted me with a stick of rhubarb to wake me up. It’s a black hole of consumerism and spending. You’ve no idea you are in it if you are on ‘social’ media, but in it you are.
All of this becomes a negative feedback loop. One leads to another and it’s all inflationary. Right now, a move away from the need for oil and consumerism is essential, especially if you are dependent on another country for it. Furthermore, it leads to greater poverty and inequality.
Those with money buy less clothes with better quality. A good pair of shoes will be re-soled, heeled and worn again and again, whereas those with lesser budgets are forced to buy less quality which is turned over again and again. Consider that the ‘fashion’ industry is responsible for 10 per cent of annual global carbon emissions. One pair of jeans uses 3,781 litres of water in its manufacturing.
Today, the average person buys 60 per cent more clothes than in 2000, and less than 1 per cent of clothing is recycled into new garments. In some countries, 40 per cent of purchased clothing is never used.
There are many sustainable methods out there for creating clothes such as shoes made from plastics dumped in the sea, fish skins and natural dyes replacing chemicals, but perhaps the greatest drive would be to switch off/tone down rather than ramp up the ‘need’.
US inflation hit 8.5 per cent last week. The UK and EU are following in its tow.
It’s driven by many factors, mainly the disruption to supply chains and the cost of fuel spiking, but excessive money supply has played its part too. I’m unsure the zero policy for covid in China is sustainable, but, if it is, the constant lockdowns closing factories will again drive up the price of goods due to supply and demand.
Zelensky has acknowledged that the Ukraine will be unlikely to join Nato, a key issue with Russia, which opens the doors for talks. In March, equities responded as the central banks raised rates. This is the market believing that inflation can be tamed. In the meantime, the conflict in the Ukraine is deeply layered and complicated, and the sanctions and response will build extraordinary inflationary pressures globally. No thanks.
Most worryingly are those with the least. Increases in costs come straight from their disposable income and in February the highest borrowing on credit cards since records began took place. Credit cards were described once as buying things you don’t need with money you don’t have. Food and staying alive doesn’t fit that description, however.
If you found The multi layered impact of inflation – highest risk for most needy helpful, you’ll find more of Peter’s analysis of the impact of everyday price rises on our Finance channel.Tags: Finance, Inflation, Peter McGahan Last modified: April 21, 2022