Why is inflation bad for equities?

Inflation can be bad for equities because it erodes the purchasing power of the currency, which can reduce the real value of earnings and assets held by companies. Inflation also tends to increase interest rates, which can make borrowing more expensive and reduce consumer spending, thereby negatively impacting corporate profits. Additionally, inflation can lead to uncertainty and volatility in the market, which can make investors hesitant to invest in equities. Overall, higher inflation rates can be a challenge for equities and can make it more difficult for companies to generate long-term growth and profitability.

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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