Inflation is the rate at which prices are rising. If the price of a bottle of milk is £1, and it rises by £5, then milk inflation is 5%. Expats may not notice price rises from month to month. But right now, prices are rising so quickly that the money they earn does not go as far. The euro area annual inflation rate was 5.0% in December 2021, up from 4.9% in November. A year earlier, the rate was -0.3%, according to Eurostat, a statistic commission from the EU. The highest annual inflation rates reported were in Estonia (12.0%), Lithuania (10.7%) and Poland (8%), while the lowest annual rates were registered in Malta (2.6%), Portugal (2.8%) and Finland (3.2%).
Electricity bills
In Spain, electricity bills have increased 62.8% in 2021, more than in 2020. Before the pandemic, the highest annual variation was in 2017, with 26.2%. So Spain is the fifth country in the European Union (EU) with the highest electricity price. Alex Mitchel, a French expat living in Madrid with his girlfriend in a small flat, paid £200 for electricity last November, a number that he was not used to paying even when living in Paris, where he shared an apartment with colleagues. “We got surprised when receiving the bill, we don't stay much time in the flat, and we just have one heating.” This reality in Spain is confirmed by Eurostat, the European Statistical Office, through its report on domestic consumers, that is, those who have a consumption of between 2,500 kWh and 5,000 kWh per year. In the first half of 2021, expats in Spain have paid 0.2323 euros per kWh (with taxes already included). An amount that is above the EU average, which is 0.2192 euros per kWh. Ahead of Spain, the territories with the highest electricity bills during the pandemic have been Germany (0.3193 euros per kWh), Denmark (0.29 euros per kWh), Belgium (0.2702 euros per kWh) and Ireland (0.2555 euros per kWh).
Food
Interests rates are impacting food prices as well. During the Coronavirus pandemic, charity The Trussell Trust, which aims to end the use of food banks, reported the number of families needing food bank support increased by 11%. It has been reported that 21.1% of the UK's population are now living in poverty as its inflation rose to 5.4% last year. In the USA, the US Census Bureau data revealed that 19.3 million households didn't get enough food in May of last year, up from 8.5 million in 2019. The consumer-price index, which tracks what consumers pay for goods and services in the US, hit 7% in December, marking its fastest pace since 1982. Among the most affected items are meats, poultry, fish, and eggs. Those prices rose 12.5% over the past year as food distributors and retailers have troubles with supply-chain disruptions and rising work costs. Last year, the price of menu items at fast-food restaurants in the States rose 8%, its biggest jump in more than 20 years, according to government data. Still, according to this report, these items have seen some of the highest gains over the past 12 months:
- Fruits and vegetables: 5% increase
- Electricity: 6.3% increase
- Furniture and bedding: 13.8% increase
- Women's dresses: 8% increase
- Jewellery and watches: 7.2% increase
- Rent of primary residences: 3.3% increase
Countries with higher inflation during the pandemic
The interests rates are increasing globally, but poor countries are struggling hard, with the repayments to creditors running at the highest level in two decades, according to The Jubilee Debt Campaign. Some countries in the financial crisis have borrowed US dollars, exposing them to the dual risk of higher borrowing costs and a weakening of their currencies, as is happening in Venezuela, which marked an inflation rate of 686.4% in 2021, the highest inflation rate in the world. In the second place, there is Zimbabwe, with an inflation rate of 676%. In third place comes Sudan with an inflation rate of 71.40%, affecting drastically on food and beverages. Argentina's inflation rate in 2021 marked 50.9%, also one of the highest rates in the world.
The G20 created a new debt amortization scheme at the end of 2020, called the Common Framework, which required countries to negotiate terms with bilateral sovereign creditors and the International Monetary Fund to secure the same deal with private creditors. So far, none of the countries that have applied for the Common Framework have had any debt cancelled.
As in many countries, the cost of living in Thailand has been rising, with many food items getting more expensive. The inflation over eggs and meat is rising up due to African swine fever (ASF). While the poor local community and expatriates feel it, Bangkok's wealthy people are likely to be untroubled by the rising costs. Dwight Turner, Director of Courageous Kitchen, an American expat living in Thailand, is struggling with the inflation that is rising meat prices. “If you just read Twitter, you'd think inflation was a localized, personal attack on expats in Thailand specifically”, he comments and critics the fact that rich people in the country don't really feel the rising prices.
How can expats deal with inflation?
Planning grocery store trips and making smart substitutes are just a couple of strategies to help with rising prices.
Do the cooking
Expats should start to get a sense of the regular items they like and do grocery trips, being less likely to waste money on products they won't use. In general, trying to cook at home is a more successful step to navigating this inflationary period since eating out is pricier than usual.
Plan ahead
Though it might seem obvious, planning grocery is more important than ever during this inflation crisis—and can make the difference between staying within the budget or blowing it up. Expats should plot meals for the week, and know whether what they need is seasonal or not, for example. Another crucial part of planning grocery shopping is checking store sales before the trip.
Substitute brands and ingredients
Substitution is the classic tip, but it may also require some pre-shopping planning. For example, since meats are more expensive right now, it might be handy to use half the usual amount of minced beef when making recipes and compensate by using lentils or other legumes.
Put the freezer to work
Start thinking about buying food that can be stored in the freezer. This includes mixed vegetables and frozen items, dried rice and canned goods such as beans and tomatoes that can be used in a versatile array of dishes and aren't as subject to inflation as fresh produce.
