“I’m Lovin’ It”... Inflation Isn’t
May 2025 | By Farra Santoso
The first betrayal I ever felt wasn’t from a friend - it was from, you guessed it, a McDonald’s Happy Meal. I used to grab one after school back in elementary like it was my love language: same restaurant, same price, a different toy each time. Then one day, the price went up - but I couldn’t just give them up, even if it meant paying a little more…
Truth to be told, I do pay the extra to this day.
Naturally, when your comfort food suddenly costs more and gives you less, you start asking questions. Why is everything more expensive lately? Is it just me or did my nuggets shrink? (it wasn’t just me).
Turns out there is a reason - and it’s not just McDonald’s. Inflation doesn’t discriminate.
So… what’s actually going on? The rising price of food - and pretty much everything else - is caused by a large issue known as inflation. Inflation is when the general price of goods and services goes up over time. A little bit of inflation is normal and can actually be beneficial in a healthy economy. But when it happens too quickly, it can reduce the value of money - meaning the same amount of cash buys you less than it did before.
Over the past few years, we’ve seen inflation spike globally. And, there are actually reasons behind this:
The COVID-19 pandemic heavily disrupted global supply chains - a network that connects suppliers, manufacturers, and distributors to deliver goods and services to consumers worldwide. When factories shut down or shipping got delayed, it became harder to supply goods. And when there’s less supply but demand stays the same or increases, prices go up.
On top of that, geopolitical conflicts - like the Russia-Ukraine crisis - led to higher prices for necessities like oil, gas, and food. Countries all over the world rely on Russia for their energy and Ukraine for their grain. When these resources become harder to access as a result of the war, global prices increase rapidly. This kind of situation is an example of cost-push inflation, where the rising cost of raw materials makes everything else more expensive too.
Tariffs, which are taxes placed on imported goods between countries, bring another major issue. Countries use tariffs to try to protect their own industries by making foreign products less competitive, most prominently in trade wars. What happens to us, consumers, is that we often end up paying more.
When all of these problems come together, we get the kind of inflation that impacts almost everyone.
“Everyone?”, you may be asking. Yes, everyone. You, your parents, Mr. Beast, that one cousin who keeps flexing his crypto (even though he’s been suspiciously quiet lately)...
Consumers often experience a decreased purchasing power, which occurs when the price of goods and services rises faster than your income, essentially making your money worth less. This can make life especially hard for families on tight budgets who can no longer afford basic necessities.
Businesses now have to deal with rising costs for commodities, shipping, and wages. And, what’s every business owners’ primary goal? To get the most money out of their business, or in other words, profit maximization. To stay as profitable as possible, many businesses raise their prices, which feeds into even more inflation.
Even governments aren’t safe. Central banks - like the Federal Reserve in the U.S. or Bank Indonesia here - have to figure out ways to stabilize their country’s economy through monetary policy. Often, they do this by raising interest rates (which makes borrowing money more expensive, so that people spend less) or controlling the money supply to reduce the amount of money circulating in our economy. When spending decreases, demand drops, and prices usually cool down too.
Countries might also reconsider their trade policies - shifting between protectionism (restricting international trade to help local industries) and free trade (removing barriers within imports and exports). They can also reduce tariffs, but this is tricky, especially if they’re currently battling a trade war.
Whether you’re saving up for a new phone, or Gojek-ing your favorite meal, rising prices matter. And the more you understand what causes inflation, the more likely you are to make smarter decisions, even as a student.
