From the course: Economics for Business Leaders

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The costs and benefits of consumer inflation

The costs and benefits of consumer inflation

From the course: Economics for Business Leaders

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The costs and benefits of consumer inflation

- Consumer inflation reduces the buying power of the cash that consumers like you and me have sitting in our bank accounts. That's bad news for the average person, but it's also important for business leaders because inflation can impact what costs are, and potentially dramatically. But on the other hand, inflation can also impact your company revenues. Let's talk about how consumer inflation can impact business operations and business planning. First, consumer inflation is a measure of inflation that includes a basket of goods the average person consumes. A rise in the cost of these goods impacts the cost of living for workers. This means that leaders focused on business planning should expect to pay more in wages to their workers when inflation is higher, and they might not have a choice in some cases. After all, some labor agreements tie wages to the performance of a consumer price index like the US CPI. So that's…

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