High Inflation

When a country is down with high inflation which brings higher cost of living in the country, what would happen to the demand of buying anything expensive or unecessary? The demand will surely drop, right? Correct!

In the UK, the demand of purchasing new cars have drop due to the rising cost of petrol and diesel and the unavailability of easy borrowing to purchase a vehicle. Adding up to the misery, cost of borrowing have just increased and so who is going to suffer? One, it will be car dealers and second, petrol stations and thirdly - garages for repair or servicing.

Consumers will tend to save more nowdays but it was not what I have seen when I went to Harrods. I saw many people from the middle east splashing out on expensive items such as Verty mobile phones ( a waste of money because the function ain't good) which has a price tag of £1000 and LV handbags. You do not see many visitors from Japan and China buying expensive goods at Harrods but it is swam with visitors from the middle east. Is this a changing tide?

I don't think so. You have to understand that the charmain of Harrods is own by a person called Muhammad Al-Fayed and he is from Egypt. Naturally there will be a flow of visitors from Egypt and its surrounding area. It is good that Harrods is keeping up with the credit crunch and still going strong. There are many shops going bust and had to close down. That is quite sad, actually. Anyway, I am goad that the chairman of Harrods is enjoying himself. That is excellent. Good luck to him.