Unpredictable, inflationary economies bad for business confidence New Nation 19 (The New Nation, Bangladesh's independent news source. It is published in English and online by the Ittefaq Group of Publications Limited, publisher of ittefaq.com, and its affiliates, “Sustainable Policy Needed to Check Inflation,” The New Nation, June 20, 2019, Lexis Nexis Database, Accessed June 29th, 2024) cpsw-sns
If so, it would make imported essential commodities costlier. Another risk of higher inflation is that; there may be a regressive effect on lower-income families in society. It happens when prices for food and domestic utilities rise at a rapid rate. There is another problem; if interest rates on savings accounts are lower than the rate of inflation, then people who rely on interest from their savings will be poorer.
It doesn't need to be an economist to realize that, high and unpredictable inflation is not good for business confidence because they cannot be sure of what their costs and prices are likely to be. As a result, this uncertainty could lead to a lower level of capital investment spending. In fact, a high rate of inflation is widely considered to be damaging for an economy. What's more important is that money becomes worthless with very high inflation.
It's a common trend that inflation occurs when an economy grows due to increased spending. However, we're not sure what method will be applied by the central bank to keep inflation under control. Whatever the method might be; we hope it would be sustainable.