Consequences of inflation are

Has a regressive-effect on lower income families
Falling real incomes
Negative real interest rates as nominal interest rates on savings will be lower than inflation so people who rely on interest from their savings will be poorer
Cost of borrowing leads to higher interest rates increasing price of debt.
Risks of wage inflation
Business competitiveness as trading countries will have lower inflation and so exports will reduce
Business uncertainty leading to less investment and lower business confidence.

Winners of high inflation are workers with wage bargaining power, debtors if real interest rates are negative, producers if prices rise faster than costs

Losers of high inflation are those on fixed incomes, lenders if real rates are negative, savers if real rates are negative and workers in low paid jobs.

	Criado por Hannah Nad mais de 8 anos atrás

Powerpoint on inflation, unemployment & migration