Fomoflation

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. 
  • For example, during festive seasons, demand for staples such as pulses and cooking oil spikes after media reports highlight potential shortages or price hikes. 
  • Influenced by the reports, consumers rush to stock up, pushing prices higher even when supply is sufficient.

Source: TH

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