Why People Still Spending if the Inflation is High

We all know that inflation is going out of hand and thus we all are feeling the heat. My monthly budget has gone up like 30% and with limited income, my savings are drying up. Thus this inflation is changing the behaviour of the money matters in most the households. As I said that inflation being so high, actually changes the financial planning.

PC; Pixabay.com

To be honest, the numbers shown by the government are a half-truth, the actual inflation number is quite high. And thus the inflation in education and healthcare is way above manageable. The prices of fuel, food, housing, auto, everything have gone up and that's why it's been called as the worst inflation in generations.

But the question is if the Inflation is that high and scary why people are still spending. Credit card usage has gone up and the malls have more footprints than in the pre covid era. People are building houses like anything and still buying luxury cars, so by looking at the numbers people are actually spending much more than the pre covid times and thus inflation actually doesn't have any effect on spending.

This is a classic case of relation along with the increased household income and for them spending money on what they used to spend is ok even if it costs more. Also, the average income of the household has gone up too thus they are balancing the act of spending and saving. For me, my salary rises around 5-10% every year so I have the liberty to spend that much more only. But there are individuals whose salary has increased quite a fold so that they can spend.

Yes despite the fears, of spending more money consumers are still shopping at least to that extent before the covid. There are two kinds of people who spend a lot, those who do not save at all and spend everything. Those who save more still have some money left to spend. But we should not be type 1, and try to be type 2 so that if the inflation rises like this, we will have some money to spend in the future too if we have saved.

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