AFTER THE BELL: Grit your teeth — how inflationary times force a gamble on health and savings

As I go about my daily routines, snatching a wrap for lunch here, avoiding a carbie sarmie there, I like to ask people how they are finding business.For some it’s pretty much the same as always. If you cut hair and have a big customer base you probably have a pretty regular crop of earnings. Cutting your hair is something you would probably do quite regularly.But quite a few people have suggested things are not that busy.Just in the past week two people providing very different medical services told me things are quite slow.One of them in a local provider brought up the subject herself, saying it was quiet at the moment. The second, when asked, made the same point.There is plenty of evidence that this is across the medical sector.While I’ve come to expect a sort of choir of middle-class grumpiness when medical aid schemes announce their increases for the upcoming year, there is something slightly less musical about this year’s chorus.An undertone that is more strident than usual.Discovery Health, which tends to read the market a little more quickly than others, announced a new “low-cost” option on the same day that it announced its increases. Clearly, it knows that if it simply raised rates by the amount it announced, it would lose customers.From time to time someone will worry in public about how many people are cutting back or defaulting on their insurance premiums, basically because they have no other choice.I can imagine how that must keep you awake at night – you are literally choosing between some kind of security and paying for something urgent, like school fees.All you can do is hope and pray that nothing happens until you can pay it again.And I think the horror, oh the absolute horror, when your daughter breaks an arm jumping on a trampoline at a party and you are on your way to a hospital with a crying and screaming child, knowing that institution has been a regular on the front page of The Sowetan newspaper.And yet, it is a perfectly rational choice.If you are up against the certainty of knowing your daughter will have to come out of her school for the year, or the potential risk of something happening, well, taking the risk is the logical choice.On the longer-term projection, the greatest chance is that there will be no change in your daughter’s trajectory.The problem is when your gamble goes wrong, and the hope of just saving a few rands for a short time while you sort something else out becomes a huge, life-changing problem.One of the things I really find difficult to understand in our economy is that while we are all complaining about the cost of living, and the cost of petrol, our retailers are reporting apparently contradictory information.Despite fuel prices rising from March, Boxer reported yesterday that in the six months to the end of August it’s internal selling price inflation was -2.4%. Yes, that’s NEGATIVE-TWO-POINT-FOUR PERCENT.Considering that so many things are cheaper than they were a year ago, you could imagine some idiot claiming that “you’ve never had it so good”.But the key thing here is what we are measuring and what we are not measuring.Boxer is measuring the goods it sells – primarily food and household items.The real cost of inflation, consumer price inflation, includes things like electricity prices, water and medical inflation.The amount you pay for all of those things has risen so dramatically that even though basic essential foodstuffs might be cheaper, that doesn’t even begin to cover the huge increases in all the other things you’re paying for.And remember, while Boxer’s internal selling price inflation might be negative, if you’re lucky enough to buy your supper prepackaged at Woolies, their internal food price inflation is about 4.7%.That means that if you are on medical aid, your food costs will have been going up quite significantly.And when you consider that fuel prices are likely to stay at these levels, or go even higher, it seems unlikely that we will get any relief soon.In fact, I have a horrible feeling that the ratchet of rising prices is only going to click higher.Boxer’s CEO, Marek Masojada, thinks so too. In its outlook Boxer expects food price inflation to begin rising a bit in its stores.No matter what happens in the US midterms I think we now have to assume oil prices are going to stay where they are.And despite all the calls for help from the government, I think it’s unlikely that Enoch Godongwana and Gwede Mantashe can do very much.As Mantashe reminded us yesterday, any kind of fuel price relief would come with hard trade-offs.All of which means we have only one option.Grit our teeth.Because we ain’t got the money for no dentist. DM