It can be hard to imagine for anyone living in the towns and villages of County Armagh, but our local economy is linked to every other economy in the world in more ways than you might imagine. Events in Asia or the presidential elections in the U.S. directly impact the prices we see in shops and the cost of our services.
While the connections are extremely complex and run very deep, here’s a very general guide to why you should be keeping up to date with world events and how they can affect your wallet.
Global Currencies
The first thing to keep in mind is that, at some level, all the currencies of the world are linked. While one currency increasing in value doesn’t directly make another currency less valuable, it can affect the cost of imports and the value of exports.
For example, if the U.S. government decides to print more money, it decreases the value of each dollar slightly, meaning that a British pound is now worth more USD, which in turn makes imports cheaper for British businesses.
It’s why currency indexes are tracked in detail using tools like the DXY chart which tracks, in real-time, the general value of the dollar when compared against other currencies. Small shifts in the DXY can have ripple effects everywhere, so if you see a bottle of cola or bag of tortilla chips change price in an Armagh supermarket, this could be contributing to it in a small way.
Supply and Demand
While currencies can have a smaller effect, bigger effects usually come from the issues of supply and demand. We now live in a world where imports are required for many necessities of daily life. The latest statistics from 2021 show that Northern Ireland imports sit at almost £50 billion and include many essentials including foodstuffs, oil and electronics.
This means that if there is an issue such as shortages or conflict in other parts of the world, or simply political changes in some cases, this supply can run low while demand remains the same.
In this situation, those who are able to supply will often increase prices, and although some companies and government agencies will attempt to absorb the price increases themselves, most often they have to be passed onto consumers in the form of price increases. It’s the reason that prices have increased recently on everything from bread to heating.
What You Can Do
As an individual, it’s impossible to directly affect global markets unless you happen to be a billionaire like Elon Musk. As a consumer, the most important thing for you to do is keep yourself up to date on world events. This includes all the biggest events like conflicts, disasters and political changes, but also smaller regional issues.
Knowing what is happening in the world can help you predict and prepare for price increases or decreases and perhaps adjust your budgeting in advance so that there are no nasty surprises later on. There will always be limits on how much or how far ahead you can adjust. but it’s always better to be informed than not.
