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4 Types of Inflation Risk John Spacey, updated on
1. Price RiskInflation affects the price of business inputs such as labor and materials. In some cases, it is difficult for a business to pass these costs on to their customers as higher prices resulting in declining margins.2. Interest RatesInflation is one of the key drivers of interest rates. Governments typically increase interest rates when inflation exceeds their targets. Increases in interest rates can lead to declining asset prices and increased borrowing costs.3. Purchasing PowerInflation reduces the purchasing power of savings. This is a risk to anyone who has saved money and is a particular concern for retirement planning.4. HyperinflationHyperinflation is a condition of extremely high inflation that spirals out of control as a government issues new currency at a high rate to pay an unmanageable debt. Under hyperinflation, prices change so quickly that normal business conditions breakdown. People lose confidence in the currency and begin to trade using hard assets such as gold or barter with goods such as food.RiskThis is the complete list of articles we have written about risk.If you enjoyed this page, please consider bookmarking Simplicable.
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