The nightmare that came true: High Inflation Era

I was reading NST Online when the bad news came. Yes, the nightmare came true, fuel price hits RM2.70 per litre. Literally, if you are driving a Wira which consumes about 1litre/10KM, you will be paying about RM 2.70 for a Char Kway Teow which costs you RM4.50 5KM away (to and fro makes it 10KM) from your house. It's tough to imagine but it is happening in front of our eyes!
Everybody will be hit. Higher income group will be the least affected group while middle class people will suffer the most. We are witnessing a downgrade of middle class income group to lower-middle class income group. Our dear Tun M has given his thoughts from a leader's perspective There are also strikes by DAP asking for a decrease on fuel prices. What will happen next and what we can do as middle class?
Though I am not an economist, but I reckon that severe after effects will follow through, some of the after affects are as below
1. Rise of transportation cost
I bet you that even POS Malaysia will be increasing their rates for postage and delivery services. McD Delivery might charge you with a 50 % hike for their delivery services as well.
2. Stock market crash
The business will be hit hardly due to high cost of inflation and slowing down of local consumerism activities. Stock market will not crash immediately but throughout the next few quarters, businesses will feel the pinch.
3. Rising rates of BLR
Inflation will definitely happen. One of the best way to curb inflation is to increase borrowing costs. Beware if you are taking a housing loan with fluctuating BLR rates. To contain inflation, BLR can be raised to 8-8.5 %. If you are taking a 300K loan, it will mean that you will need to pay RM500 more per month if the BLR is fixed at 8.5 % instead of 6.75%
4. Decrease in Real Estates Value
I agree with real estate experts that properties situated far away from cities will suffer from depreciation. However, I certainly do not agree that higher end properties that is near to the city will experience a boom in prices. A lot of houses and apartments around high-end areas such as Damansara and Sri Hartamas are rented out as quarters for restaurant and cafe workers. With high fuel prices, fine-dining and entertainment industries will definitely experience a drop in business volume. With a lot of vacancies for house rental in high end areas, do you think the property value will go up?
5. Soaring prices of hawker food
Hawker food business might go to an end. Would you pay RM 7 for a plate of Char Kway Teow? This is the reality, hawker food will cost more than today's prices of RM4.50 on average. When a plate of Wan Tan Mee cost you RM7, you will be thinking, I would rather cook myself! Even a pack of Maggie Mee with an egg cost you more than RM1 now, what do you expect,:).
6. Gen Y learning curve
We are living in an era where Gen Y pampered kids finally started their life journey seeking jobs. Gen Y will have a hard time looking for jobs as they normally ask for high pay and unable to cope with stress. It's a time for them to learn what is hardship or the country will fail with low productivity.
7.Widening of social gap
Middle class income group used to be able to afford imported Thai rice, which cost about RM25 instead of RM50 now for 10KG. Yes, they still can afford it now but everyone will think twice before buying. A lot of middle class people will switch to value-for-money, which suggest a downgrade in their lifestyle and standard of living. It turns out to be, you can only purchase imported fragrant rice without second thoughts when you are taking a 5 figure salary. And sorry to Gen Y again, you can no longer afford a Vios on your own for your first job.
8.Reduce of Office demand
Many will opt for SOHO and business owners will look for cheaper locations which is closer to their homes. Don't you think so ?
9. Credit Card Woes
Credit card companies will be forced to increase their minimum wage requirements but many will still get it. Gen Y debts will be growing faster than ever. Savings will be something that is easy to talk about but hard to be put into practice, especially when you are living in city.
10.Depreciation of MYR
Malaysian Ringgit might fall to lower levels due to pulling out of foreign funds as our country has become less attractive for business. Buy some Singapore dollar or open an account in Singapore,:).

Disastrous. What can we do then ? How to survive in city with such circumstances? I have provided some tips in my previous post. But i would like to give more tips here, with regard to the hike in fuel prices.

Saving Tips
1. Work from home
Suggest to your boss that to work from home on alternate Fridays.
2. Use Social Network to Carpool
Somebody please create some apps to carpool using Facebook. Social network gives you the trust to car pool with unknown strangers.
3. Plan your shopping list
Plan your groceries to avoid having to go out again just to get some soy sauce
4. Optimized your driving speed
Drive at off peak hours and average speed of 90-100km/h if possible
5. Food delivery
If you often drive out for lunch or dinner, try considering food delivery once or twice a week.
6. Register for Online Payment
Online payment and banking can save your time and fuel.
7. Check catalogues before shopping
Buying gadgets in Lowyat? Check them in Lowyat.net. Avoid wandering around searching shop to shop. Your parking fees and time might not worth the effort. For hypermarkets, most of them are distributing brochures house to house now, check them before you shop.
8. Call less, Call for free using Flekx.com
Call mobile phones and pstn using www.flekx.com softphone. You can save a great deal!

Financial Tips
1. Fixed Rate Loan
If you planning to get a housing loan, go for fixed rate loan.
2. Cash
Keep some cash , probably worth 3-6 month of your pay, preferably some in foreign currencies.
3. Stock market/Mutual Fund
Reduce holdings in share market or mutual funds and wait for a downfall to enter again,:)
4. Properties
Try to get out of properties. This is a bad time to get a second property if you have already got one. Properties market will collapse if inflation is uncontrollable.
5. Foreign Currencies
Carry trade some foreign currencies especially SGD.

Look for other posting below for more tips!

Take care guys.