High inflation has many costs Inflation erodes the value of money.
When future prices are less predictable, sensible spending and saving plans are harder to make. People increasingly fear that their future purchasing power will decline and erode their standard of living. Inflation encourages investments that are speculative and take advantage of inflation rather than productive investment. It can also create the illusion of temporary financial success while masking fundamental economic problems. Businesses and households must spend more time, and money, protecting themselves from the effects of rising costs and prices.