9 Disadvantages Of High Inflation

1. Fall in real wages – high inflation rates can lead to a fall in real wages. 2. Inflationary growth tends to be unsustainable leading to a damaging period of boom and bust economic cycles. 3. High inflation rates tend to cause uncertainty and confusion leading to less investment. 4. Negative real interest rates: If interest rates on savings accounts are lower than the rate of inflation, then people who rely on interest from their savings will be poorer.  5. Uncompetitive economy – inflation tends to make the economy uncompetitive. 6. Menu costs – the cost of changing prices lists becomes more frequent during high inflation. 7. Inflation will reduce the real value of government bonds.