Inflation And Its Effects On Potential Consumers

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Inflation is used to describe a sustained increase in the general price level for services and goods. When inflation increases, every dollar that an individual owns buys a lesser percentage or proportion of a service or good. In most cases, inflation is caused by an imbalance between supply and demand of money, changes in distribution and production cost, or when the level of tax imposed on products and services is increased. In times when a country’s economyexperiences inflation, the value of its currency reduces. This has a negative effect on the quantity of goods and services demanded because each unit of currency is able to purchase fewer goods and services. Inflation yields the worst impact on potential consumers because it becomes extremely difficult for them to access or buy basic commodities required for survival. To enhance their ability in purchasing basic commodities, consumers seek for high-income increase from their respective employers (Hall, 2009).
Regardless of the negative consequences associated with inflation, a moderate or medium inflation level characterizes a favorable economy. In fact, an inflation rate of between 2% and 3% is termed as very useful to a country’s economy. This is because it encourages people to increase their level of purchase and at the same time increases the level of borrowing in a country due to the low interest rates on borrowed finances. Encouraging people to borrow money at lower interest rates is a

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