High inflation poses significant challenges for economies, with effects ranging from reduced purchasing power to economic instability. Understanding its causes, measures, and impacts is crucial for businesses and policymakers.
- Effects of high inflation on business include increased operational costs, wage pressures, and reduced consumer spending
- Causes of demand pull inflation emerge from excessive economic growth and increased consumer spending
- Measures of inflation CPI and RPI serve as key indicators for tracking price level changes
- Low inflation (<5%) is generally acceptable, while high inflation (>10%) creates substantial economic problems
- Cost push and demand pull factors are primary inflation drivers
- Inflation impacts range from wage-price spirals to international trade complications
