Trickle Down Economy: Fact or Fiction?

Recently, I’ve been seeing posts on the current inflation rate in the country. The inflation rate for September 2019 was at 0.9% compared to 1.7% in August 2019 (image source:ABS-CBN news).

inflation SEPT 2019

But is it something to rejoice about?

Let me ask you: Do you feel it? The low prices? Is it there?

To the common people or “masa” or those living in poverty line, a low inflation rate means nothing at all if prices do not go down. The same is true for the middle income earner to be frank about it.

In economics parlance, inflation is a general increase in prices and fall in the purchasing value of money.

The last time I checked, diesel prices have not gone down. My monthly grocery has not gone down to the level that I enjoyed 3-4 years ago.

To the Financial Advisors or investment gurus, they will pounce on this low inflation rate as an opportune time to invest. Heck, you can even put money in digital banks that guarantee 3% to 4%, if you are conscious of the inflation rate (I just did!). Sure, it’s one thing to take advantage of and invest; it’s another thing to spend your money these days.

I won’t delve into statistics since we just need to get real with our terms.

How is your living condition? Is your salary enough to get by or do you need to work extra to be able to meet your monthly expenses?

Bottomline, this low inflation can only be felt if your purchasing power increases and by that, you get to spend more with your money.

I remember about 3-4 years ago, when diesel prices went down as low as P18/liter or at least below P20 (I surely miss those days) and the inflation rate was hovering between 1% to 3% if my memory serves me right. And the grocery prices I spent these days, would have given me worth or equivalent to 2 to 3 grocery carts for the same goods that I buy 3 to 4 years ago.

And if I may add, whether the inflation is low or not, this concept of “trickle down economy” will work only if you are able to find a job and work hard, been saving and investing for quite some time, because the truth is – whatever state of the economy is, it will not save you if you will not do something to improve your financial condition in the end for your present situation and your future.

The “trickle down economy” has never been inclusive at all.

It is always a subjective one.


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