Why is inflation bad for the economy?

Inflation is generally considered bad for the economy because it erodes the purchasing power of a currency. When prices for goods and services increase, people need more money to buy the same amount of goods they used to be able to purchase with less money. This can lead to a decrease in consumer spending, as people may choose to save their money instead of spending it on goods and services that have become more expensive. Additionally, inflation can make it more difficult for businesses to plan for the future, as they may not be able to accurately predict future costs or prices. High levels of inflation can also lead to social and political unrest, as people may feel that their standard of living is decreasing and demand action from their governments. Overall, inflation can have negative effects on economic growth, stability, and the overall well-being of a society.

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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