What are the effects of inflation?
Inflation affects everyone in the economy, and it often imposes some costs, although it can also provide some benefits. High rates of inflation as well as deflation are problematic for an economy. The more harmful effects of inflation, however, stem from its unpredictability—that is, the fact that movements in inflation from period to period cannot be perfectly anticipated.
What problems does predictable inflation cause?
Even if everyone could predict what inflation was going to be, there are still ways in which rising prices would impose costs on an economy.