Declining Purchasing Power: The Impact of Inflation and High Essential Goods Prices on Consumer Spending and the Retail Industry

Despite the recent decline in inflation, people’s purchasing power will not fully recover from the drop in their wages and other essential goods and services. The prices of gas, electricity, water, public transport, and fuel have increased beyond the inflation rate. As a result, consumers have to spend more money on these bills than before, leaving them with less disposable income for other purchases. In March alone, while inflation stood at 290%, prices for food, fuel, medications, and other essential goods increased by even higher percentages.

This decrease in real wages has led to a significant reduction in consumer spending. As a result of this reduction in disposable income, sales in supermarkets, restaurants, and household appliances are expected to drop by 8% this year. To adapt to these changes, consumers are turning to local stores and discounts. Meanwhile, companies are focusing on cost optimization and offering more affordable options to attract budget-conscious consumers.

The retail industry also experienced a decline in March as car registrations fell by 35.1%, motorcycle registrations declined by 43.3%, and retail sales dropped by 12.6%. However, despite these challenges, there is hope that disposable income and consumption will recover as the market adjusts to the changing economic landscape.

In conclusion, despite recent efforts by some companies to reduce prices and stimulate sales, the progressive decline in inflation over the past four months will not be enough to restore people’s purchasing power fully. The loss of real wages combined with rising costs of essential goods and services has resulted in decreased consumer spending across various sectors. However, there is hope for recovery as the market adjusts to changing economic conditions.

Overall consumption is expected to drop by 8% this year due to decreased purchasing power resulting from high prices for essential goods and services such as gas