Most contracts are not renegotiated. Thus, when inflation is unanticipated, businesses' relative prices can be distorted either because contracts are set and not renegotiated or because it takes time for firms to distinguish between relative and general price changes. This makes it difficult for businesses to invest in a high inflation environment, where relative prices are variable. Firms may misinterpret the ability to raise their product's price as stemming from an increase in demand for their good relative to others, and invest too much. Or they may be less confident that they will earn a return sufficient to pay off debt, and thus may curtail investment.
Uncertainty is always present in markets, of course.
No one can predict the future. To the extent that inflation even at low levels adds to this general uncertainty, it is costly. Many economists and policy makers argue that zero inflation would allow consumers and firms to write simpler contracts and make long-term plans for retirement or future investment with less worry. The textbook model and aggregate measures of inflation imply a smooth, uniform rise of the general price level. But in fact, inflation moves through relative price changes across industries.