Fomoflation Latest News
The recent signing of a proclamation by the U.S. president raising the annual fee for H-1B visas to $100,000 a year led to a sudden panic-driven demand that pushed ticket prices higher, illustrating a textbook case of fomoflation.
About Fomoflation
- Fomoflation occurs when consumer behaviour (demand psychology) and market or supply pressures combine to create rapid inflation even in essentials, where prices rise faster than underlying economic factors would justify.
- The cycle of panic-driven demand and resultant price surges illustrates how fomoflation operates.
- Therefore, it is the fear of ‘scarcity’ or the Fear Of Missing Out (FOMO) which triggers buying frenzy, setting off an ‘artificial demand’ loop and eventual price rises.
- Unlike usual inflation, which is an outcome of macroeconomic factors, fomoflation arises from behavioral psychology, often amplified by social media.
- It can also be seen in consumer goods.Â
- For example, during festive seasons, demand for staples such as pulses and cooking oil spikes after media reports highlight potential shortages or price hikes.Â
- Influenced by the reports, consumers rush to stock up, pushing prices higher even when supply is sufficient.
Source: TH
Fomoflation FAQs
Q1: What best describes the term ‘Fomoflation’
Ans: Price rise driven by fear-based consumer behaviour rather than actual supply shortages.
Q2: What triggers Fomoflation in an economy?
Ans: Fear of scarcity or ‘Fear Of Missing Out’ among consumers.
Q3: Which factor amplifies Fomoflation in the modern economy?
Ans: Social media-induced panic buying.
Q4: How does Fomoflation differ from usual inflation?
Ans: It arises from behavioural psychology rather than macroeconomic causes.
