Inflation - Impact and Causes of Inflation on a country

 Impact and Causes of Inflation on a country

Inflation is a general increase in the level of prices of goods and services (in other words, inflation is when the price of things keeps going up). Inflation impacts the cost of goods and services, which causes prices of these items to rise. In fact, inflation is very much linked to your country's purchasing power.

Inflation may be caused by supply shortages or by demand pressures.

If prices continue to rise, it will eat into people's incomes and they may not be able to afford basic goods and services. This will put a strain on the economy and society as a whole.

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Impact of Inflation:

The impact of inflation on a developing country can be summarized in three points:

1. Prices of goods and services will go up since they are manufactured or imported from abroad

2. Foreign investors would get scared away from investing more money in the country

3. The government might resort to printing more money which would lead to higher levels of inflation

Causes of Inflation:

The causes of inflation are typically due to supply side factors, monetary policy, or debt of the country.