Thursday, December 6, 2012
Cost of Living, Inflation & Exchange Rate
Source: tradingeconomics.com When we first visited Peru in December 2008, the Peruvian Sol to US Dollar exchange rate was about 3.3. For the most part, the cost of things seemed reasonable, if not downright cheap in some cases. Fast forward
to when we actually moved here, back in September of 2010, and the rate had fallen to 2.75, and now it's down to 2.5! That's about a 25% loss of value in 4 years. But it's worse than it sounds, because it means that to have the same buying power today that you had been then, you would need 32% more dollars. To see it more clearly, if you needed, let's say, 5,000 soles to live on, back then you would have needed 1,515 dollars, but in today's dollars, you would need $2,000! You could say that, unless your income has increased by 32% during the last 4 years, you are in trouble. Of course it's a lot worse than that, since prices of everything have increased dramatically during that time period also. Let's just say that on average the prices of the things you need have increased by 20%. You would now need 6,000 soles, or $2,400 to have the same buying power that your $1,515 would have bought you back then. So what you really need to have had is a 58% increase in your income. If that's not your reality, something dramatic is going to have to happen to your lifestyle.
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I makes me fill like I'm between a rock and a hard place! So what does 2013 have in store for us? What is lower then poverty? And they keep building apartment buildings that no one can afford!
Surely the US$ has to stop losing value sometime soon? Maybe if the Relics (republican elected looney idiots club) would stop blocking everything Obama tries to do?
Can't comment knowledgeably on US politics, but people worldwide living on fixed incomes are hurting worse every year. It wasn't until I became one I realized how fortunate I am to have a little more than a government pension at my back. What about the billions who entirely lack any kind of pension? As the Baby Boom ages, we]ll see even more poverty among the elderly. Right now, someone must be able to afford those new apartment buildings, but it can't last and the developers are in for a huge letdown. Can anyone tell the class what G R E E C E spells?
Yes, it's certainly not just the US that is in deep trouble financially. There are people around the world who are seeing their buying power evaporate by the month. And not just retirees. It's actually interesting to be living in a country which has a robust economy. Wherever you are, it's clearly a time to re-evaluate your financial strategy.
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