How does inflation affect people with fixed incomes, and why is this a major concern during periods of high inflation in countries like the Philippines?
Answer (1)
Inflation affects everyone, but it is especially hard on people with fixed incomes, such as pensioners, minimum wage workers, or those receiving regular allowances or government support. A fixed income means the amount of money you receive regularly does not change, even if prices go up. So when inflation happens and prices of goods and services increase, people with fixed incomes cannot keep up because their earnings stay the same.Imagine a retired Filipino lola who receives ₱5,000 in pension every month. That money might have been enough to cover basic needs like rice, medicine, and electricity a year ago. But if inflation rises to 6% or more, the prices of those same items may now total ₱5,300 or ₱5,500. That means her pension no longer covers everything she needs. She either has to borrow, cut back on food or medicine, or rely on relatives.This becomes a major concern in the Philippines, where many citizens—especially senior citizens and minimum wage workers—live on tight budgets. When inflation spikes (like during global oil price hikes or after typhoons destroy crops), the poor suffer first. They spend a larger part of their income on food, which is often the first category to be affected by inflation.While some fixed income workers might receive a Cost of Living Allowance (COLA) or wage adjustments, these usually happen after inflation has already caused damage. Worse, these adjustments are often small and delayed, which means people continue to struggle.In the end, inflation reduces the purchasing power of people with fixed incomes. They can buy less with the same amount of money, which lowers their standard of living. That’s why economists and governments pay close attention to inflation, especially when setting policies that affect the most vulnerable members of society.
