I have established in previous posts that I am no professional economists nor do I have a degree in business/economics. However, by taking a couple of university courses and loving to connect the dots from time to time I find some good information to share and educate the world with. In the past few weeks things have been diving into a weird mixture of economical inflation/deflation.
In order to understand my point of view we need to clarify couple of things:
- Oil prices: Oil prices has been hitting the floor since the being of this year. This probably a good news to us but it’s not. With lower oil prices, countries that sell oil for financial boost such as Russia, & China will have lower-income. Meaning, they will have less money to pay their debt, pay for employment, and make a better living standard for their people in general. Second, it production that requires oil. Everything nowadays require oil event cloth production. So when oil prices goes down companies that sell oil subtypes to factories and production house will have less revenue.
- Currency: This year has been a jump and fall to all major currency. With the start of the year the USD has been sky rocketing with no visible limits of when to stop. The euro due to the euro crises has been facing the floor for a while. And finally with the recent Yuan’s demanding to get into the IMF [International Monetary Fund] according to Wall Street Journal of March 25th issue.
Now the question is how does all of these effect “us” as people?
It all started to show up on newspaper on around mid March of this year . An article by Chow & Masidlover talked about how the Luxury fashion brand Chanel are starting from ‘April 8’ to increase the prices of their products by up to 20% in China. This is due to the significant price difference between Eupro and Asia; driving people to buy from Europe stores and re-sell them in Asian black marker. I quote from the article:
“The price in China for the Chanel classic 11.12 bag is 38,200 yuan ($6,095), or about 63% higher than the €3,550 ($3,750) price a shopper pays in Paris for the same bag.”
Another article by Neetha Mahadevan from the same WSJ talked about the increase demand for cars [mostly BMW] in the euro zone [mostly in Spain = “17% increase].
Now to top of this the 25th of March WSJ issue; two articles discussed similar topic. First by Saabira Chaudhuri pointing the price increase in retail stores such as H&M [who’s 80% production are by USD, and only 18% is Euro]. That was due to the dollar increase. It is important to mention that the increase effected stores who hold more mainly dollar transactions than euros. This is all because of the increase shoot of the dollar.
*The euro and USD in terms of the fashion market will level soon [basic macroeconomics rule] to eliminate any price difference. Further explaining is that people will turn to buying from the euro marker more as its cheaper, thus producers will increase the euro product price, making it almost equal to USD.
The final article was by Manuela Mesco who’s article supported the first article presented about Chanel and luxury brand increasing price as the euro falls and the price gap widens between the east and west trade.
Looking at these different articles and what they hold, it came to my attention that: oil, currency, and all of this economical mess that’s happening will affect us and our shopping habits [common sense, but majority of us don’t notice it]. So my advice is for you my lady to go shopping for that dress you’ve been wanting but waiting for the price to drop, or you sir who is looking to buy a new car but waiting for the right time. There is no better time than now to buy whatever you are saving for**. Because if you wait any longer all that’s going to happen is equal price range and high over all.
*Note: Most of my reference and news comes from Wall Street Journal South Africa & Middle East version.
**Note: all products except electronics as they have constant price. different economical category.