Consumer Purchasing Power when Inflation Occurs

When it comes to consumer purchasing power during inflation, it may not change much when purchasing essential goods and services as they are necessary to fulfill their needs. However, their behaviour when it comes to purchasing unessential goods will be greatly affected as they become more cautious about spending their money on desirable goods. in an effort to cut costs, some consumers are willing to try alternate brands of goods that offers the same type of product for a cheaper price. And consumers may also turn to using local goods instead of imported goods as local goods are usually much cheaper.

From our survey, 11 out of 15 said that they would look for alternative products during inflation

Taken from Federation of Virginia Food Banks at http://vafoodbanks.org/

An increase in inflation means an increase in the prices of goods and services, This will have an impact on the consumers' purchasing behaviour. The increase in inflation will affect the ability of the consumer to be able to purchase goods and services for a higher price or not. Inflation affects the value of money directly because as it increases, the value of money decreases, and so does the purchasing power of consumers. The effect of inflation on consumer behaviour is more severe when wage do not increase to accommodate the increase in prices (Lee, 2013)

From our survey, 8 out of 15 said that their expenditure does increase during inflation