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It seems like they would lose money on their goods and services.

closed as off-topic by Dheer, Chris W. Rea, JoeTaxpayer Dec 6 '15 at 13:21

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3

In most circumstances prices do not change on a daily basis on most goods and services, and just because inflation is high does not mean all prices of every good and service has to increase over the short term.

Prices are determined by costs of doing business, manufacturing costs and wage growth, and by competition.

For example, if one product has very little competition and costs to produce it have gone up, then the seller might increase prices by 10% to cover their cost of buying the goods off the manufacturer, whilst another product may have plenty of competition, the seller has sourced a new manufacturer from overseas with lower manufacturing costs, they might lower their selling costs by 5% to better compete and increase their sales.

Inflation figures are calculated from a set basket of goods and services, and if inflation increases it does not mean that all prices in that basket have gone up, only that the aggregate for the whole basket of goods and services has gone up since the last inflation figures were calculated.

3

How high is high? In countries that suffered hyperinflation such as the Weimar Republic around 1923 and Zimbabwe around the late 1990s this certainly did happen on a daily basis. E.g.

One boy, who was sent to buy two bread buns, stopped to play football and by the time he got to the shop, the price had gone up, so he could only afford to buy one.

or

One father set out for Berlin to buy a pair of shoes. When he got there, he could only afford a cup of coffee and the bus fare home.

or

At the height of the country's economic crisis that year, prices were rising at least twice day, with Zimbabweans forced to carry cash around in plastic bags just to buy basic items.

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It can take a while for inflation to seep into all aspects an economy and be felt by a consumer. Often, things that consumers use the most (like gasoline, wheat products, corn products, soy products, and sugar), are commodities spread across global markets with their own pricing which may be impacted by inflation in any given country.

Also, inflation can be beneficial in some ways. A $500/month mortgage payment was a big deal 30 years ago, and now would be considered trivial. That's entirely because of inflation.

Run-away inflation, where people are burning the currency to stay warm, is a different beast altogether. Be wary of people who conflate inflation, consumer pricing, and destructive currency devaluation, because they're not the same things.

  • I think you need clarification on that beneficial example. I think what you are trying to say is that you borrowed money before the inflation and paid it back in dollars that are worth less. Of course this is factored into the interest rate. – JohnFx Dec 7 '15 at 2:48

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