Effects of inflation
Recently the world has experience such unparalled effects of inflation than most people can remember in their lifetime. The cost of living has gone beyond what people can comprehend. citizens need help with debt management.
Currencies have been losing value, making life near impossible for citizens. Projects started before inflation have stalled, fuel prices have skyrocketed, and food prices tripled in most parts of the world. This has created a vicious circle of poverty, which has sucked some of the middle class to poverty status.
Employees want salary increments and which employers are not able to pay. This causes tension and further dips an economy into deeper inflation. Effects of inflation are listed below.
Effects of inflation- Increased costs of production
The cost of production of goods will increase due to increase in prices of raw materials, cost of electricity and fuel. This increase in cost is passed on to the consumer. With increased costs in the final product, the sales volume will decrease since most people will be unable to afford the product resulting in lower revenues. Lower revenues imply that companies are not able to meet their obligations leading to most of these companies laying off staff to manage their costs.
Effects of inflation- poverty and unemployment
The unemployment rate increases leading to poor living standards. The ramifications of this are that the health bill increases, propelled by increased vulnerability of citizens to diseases. This leads to reduced productivity and low live expectancy.
Effects of inflation-increased crime
Rate of crime and general unrest (demonstrations, violence and lawlessness) will increase as there are no employment opportunities and yet the basic needs must be met. In general there will be insecurity. The types of crime become more and more sophisticated which may lead to acts of sabotage and terrorism
Effects of inflation-low investor interest
Due to insecurity, potential investors become repelled and no job opportunities are created. This will increase the poverty levels and little to no development will be realized in the economy, Banking in kenya has been adversely affected by inflation
Even with the bad times one has to hope that the people charged with the responsibility of controlling inflation will have the wisdom and intelligence to do so. If inflation is let to run amok it will ruin not just one country but many. The effects of inflation are serious for any economy and no economy is immune if inflation is not checked.