What are the Long-Term Effects of Inflation on Business?
Long-term inflation can lead to several significant effects on businesses:
Decreased Purchasing Power: Sustained inflation erodes the purchasing power of consumers, potentially reducing demand for products and services. Uncertainty: High and unpredictable inflation creates uncertainty, making long-term business planning more difficult. Capital Investment: Inflation can make capital investment more expensive and less attractive, potentially stifling innovation and growth. Competitive Landscape: Inflation can alter the competitive landscape, giving an advantage to businesses that can manage costs effectively.