The Effects of Inflation in Malaysian Economy Essay

645 Words 3 Pages
Investment will drop because inflation. There may be greater uncertainty for both firms and households when inflation. Firms become unsure of what their costs will be and what prices they will receive from selling their products in the future so may be reluctant to invest. The good timing for company to grow their business is when the economic conditions is at low inflation (Inflation, n.d.). This is easy for businesses to have a well planning for their activities and investments. Most of the time, large companies’ investment planning can cover for the next few years (What is inflation and how should it affect my investing?, 2009). There will be less investment when high inflation because it will make the business costs rise faster than the revenue that the company receive. When high inflation, it will bring many uncertainties into business planning, as the money value is changing means companies cannot ensure of their future costs or revenues. This will result in negative implications on the economic growth in the economy.
The consequence of inflation is people will expect prices to rise, then they will consume more to avoid higher costs. Because local trader will hide the stocks or take advantages in the situation that the oil price increase to increase the prices of good. Increase of crude oil price make Malaysia soared to a 26-years high inflation in year 2008, June (Lesova, 2008). In that time, the oil price has increased to USD 145 a barrel (Crude Oil Price History,…