What was the effect of inflation on industry and its workers?

First of all, let's define the concept of inflation as the sustained rise in the price level of a country or territory during a certain period of time (month, semester, year). It harms the value of currencies because after an increase in inflation, using the same amount of a currency, consumers are able to buy less goods or services. Therefore, the purchasing power of this currency has been reduced.

Industries are severely affected by increases in inflation. On the first hand, the product and services produced by a certain industry have become more expensive as consumers will need more money to buy the same amount of them. Hence, due to the law of demand, as goods get more expensive less consumers would be willing to purchase them. This is translated into a decrease in sales for the industry and a profit loss.

Secondly, workers of an industry who is sufferring inflation increases are affected in a double way. First of all, as the industry is losing sales and earning less, is probable that it affects salaries negatively, and even companies will have to get rid of some members of the staff as they cannot continue paying everyone after the profit loss. Also workers are consumers. Therefore when they come to buy products after inflation increases, they will have to face the purchasing power loss too.

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