Today the UK's Office for National Statistics announced that the annual inflation rate is at 2.9%. Our office has frozen pay for two consecutive terms now. Based on the time value of money and the inflation rate, we're effectively taking a pay cut of 2.9% now.
If we started earning £100 a year ago, this is equivalent to earning £97.10 today. But if a product was bought at £100 a year ago, the same product would cost £102.90 today. Simple maths. What does this mean? That we have to pay more for less, or having less to buy. Either way, this is not good for the economy.
What is anyway? In this time of recession, I guess we can only count our blessings that we are still gainfully employed. The time value of money is meaningless without an income.
Wednesday, January 20, 2010
Time Value of Money
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2 comments:
Oh, Yap. I am more aggrieved with the way the Pound Sterling has fallen. I used to be paid a respectable wage but with the value of the £, I am being paid less than I was paid five years ago in Australia, pre-Masters degree and the excellent years of experience I'm getting here in London :(
some reports projected USD going to drop till RM3.00 or lower for USD1 at the end 2nd quarter of the year.
hmm..bad ya.
Apparently in M'sia the impact not as great compared to outside. dono is good or bad news.
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