Inflation's Ripple Effects Disrupt Markets and Weaken Economy

High inflation reduces consumer wealth and forces frequent wage negotiations and coping efforts. This disrupts markets and reduces purchasing power.

Sticky wages and taxes mean that some workers and investors lose purchasing power from inflation. This reduces economic activity.

Sticky prices cause some businesses to change prices faster than others, distorting consumer decisions.

Interest rates may lag inflation, reducing lender profits. This scales back lending.

Inflation may shift investments from stocks to real estate. This raises business costs and lowers productivity and wages.