Who cares about ‘Bourgeois Benje’?

For all the recent talk of inflation, I have been disappointed that the debate largely reduced into conjecture about where interest rates are heading and mud-slinging at the government.

Yes interest rates are going up, and yes the government has been spending heaps of money to keep us out of a hole while the public health measures shut down large parts of the economy. But we can debate those things later.

For me more emphasis in this inflationary debate needs to turn to the ‘have nots’. Inflation is society’s ultimate tax on the poor. It is a ruthlessly regressive machine that zeros in on our poorer households and squeezes them for all that they don’t have.

Households of relatively modest incomes are the ones that will feel the greatest pain from inflation running at a 30-year high because their circumstances mean that almost all of their income is spent on basic needs without much flexibility on what they consume. In short, these people spend what they earn on the basics, without any discretionary buffer that can absorb price increases. These households have no choice when they go to the supermarket, need to fill up the car to get to work, or pay someone to fix a leaky pipe. They pay what they have to for basic goods and services, and hope like hell that they will be able to ask their boss for a pay increase.

Compare this to someone like me, where inflation is a mild inconvenience. I have plenty of discretionary expenditure that can flex if price increases get too much for me to stomach. I can choose to consume things that are less affected by inflation. For example, if going out for brunch gets too much, I can cut it back to once per week, or if hairdressers get pricey then I can get my tips frosted once a quarter rather than once every six weeks. And I can easily put up my hourly rate in line with inflation to protect my margin for my time spent working.

What I am saying is that when we are thinking of inflation, it is important to think micro, rather than staying macro. We must spare a thought for ‘Struggling Steve’ – who cares about ‘Bourgeois Benje’!