What are the costs of inflation?

Inflation can have various costs on an economy, including reducing the purchasing power of consumers, distorting price signals, discouraging investment, and causing uncertainty in financial planning. Inflation can also lead to higher interest rates, which can make it more expensive for individuals and businesses to borrow money. Additionally, inflation can disproportionately impact low-income individuals and those on fixed incomes, as their wages and savings may not keep pace with rising prices. Finally, high inflation can erode confidence in a currency and undermine economic stability.

The effects of inflation are often not directly felt but are played out over a long time, especially long-term investments are vulnerable to inflation.


At Horizon65, we created a mobile app that enabled you to check the effect of inflation on your savings.

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