Merry Christmas and happy New Year To All!!
As per the news this morning, Singapore's CPI (Consumer Price Index) - All items in November 2014 dipped to -0.3% from 0.1% in October 2014. This marks the first deflation for the republic in 5 years.
This morning, shared the news with my wife and we had a brief debate about whether deflation is good for us (general consumer) or not? My view is that it is good for us since we can prolong the inflation rate and preserve the value of our money longer. My wife view otherwise as she think that if the economy if not moving forward in a prolonged manner, ultimately the consumers might suffers (e.g. in the form of lower or no salary increment etc...). Maybe I am having a short term view and my wife is having a long term view.
Of course, there is no right or wrong answer, ultimately it is depending on our perspective. For me, I am happy that we are in deflation instead of inflation mode...for now!
Cheers!
P/S : If you want to know the difference between Deflation and Disflation (yes, there is slight difference), check out my earlier post here.
Hi Richard
ReplyDeleteI feel like as consumers they generally dont care too much or probably feel happyif prices were to remain the same or cheaper. But on the whole the economy suffers and we see this going back to haunt the consumers in other forms.
I hv to take sides with your wife this time round.
In the spirit of xmas I hope you forgive me :D
B : hahaha.. As I said earlier lor, there is no right or wrong answer.. Thanks for supporting my wife's view ;-)
DeleteIf is due to oil price coming down, is good. It does not means the economy is not growing. It still is. Think about it. If value of money goes up, bulk of our money is in saving(or investment) which benefits the most to us. Salary is drawn monthly though maybe lesser adjustment, the value of money drawn is higher which relatively speaking is equivalent to pay increase in term of purchasing power. So to me obviously is good. The problem with many people is they tend to think money as absolute number and that number has to go up. Well look at Argentina or Peru or even Russia, super inflation due to lower value of their currency. All local saving devalued. Monthly salary drawn is of low value. So i would say long term is still good if due to low oil price.
ReplyDeleteCory : I am with you! ;-)
DeleteThanks for dropping by and comment.
Merry X'mas and Happy New Year!
If it is short term deflation, it's good for consumers as things can be bought more cheaply. But if it goes on for long term, people are just going to hoard more money. Businesses will suffer and that will come back to haunt consumers. And what if we need to sell our assets? They'll be worth much less. Just look at Japan as an example.
ReplyDeleteowq : I am with you too ;-)
DeleteMerry X'mas and Happy New Year!