Why does inflation reduce the value of money, and how can this affect people’s everyday lives in the Philippines?
Answer (1)
Inflation reduces the value of money because as prices rise, the same amount of money can buy fewer goods and services. This is called a loss in purchasing power. For example, if last year you could buy a kilo of rice for ₱40, and this year it costs ₱50, then ₱40 no longer has the same value—it buys you less rice. This affects individuals, businesses, and the entire economy.For everyday Filipinos, this means they may not afford as much as they used to. A family earning minimum wage might feel like their salary is “nauubos agad,” even if their income hasn’t changed. This is because essential items like food, medicine, transportation, and utilities have become more expensive. If their salaries or allowances don’t increase at the same pace, they end up having to cut back—maybe eating less meat, delaying tuition payments, or using less electricity.Inflation also affects students. Imagine a student who receives a weekly allowance of ₱500. If prices in the school canteen or sari-sari store go up, that ₱500 won’t be enough for snacks, lunch, and transportation. The student might have to skip meals or walk home to save money. For working adults, the effects are even more serious. If inflation is too high, it can delay plans to buy a house, start a small business, or save for college.In the broader economy, high inflation can cause people to lose confidence in the currency. If the public fears that prices will continue rising, they will rush to spend money now rather than save it. This kind of behavior speeds up inflation even more and makes it harder for the government to control.That’s why inflation, even at moderate levels, is something we all feel in our daily lives. It changes how we spend, how we plan, and how we manage money.
