In general, high inflation is usually a sign of a struggling economy because it results from a fall in consumer interest. When there is high inflation, prices of goods and services rise rapidly, but wages may not increase at the same pace. This situation can lead to a decrease in consumer purchasing power and confidence, as people find it harder to afford the same goods and services they used to buy. As a result, consumer spending tends to decrease, impacting overall economic activity negatively.
Conversely, low inflation or moderate inflation is typically associated with a healthier economy. It allows businesses to plan for the future more effectively, consumers to maintain their purchasing power, and the economy to grow steadily without the negative impacts of high inflation.
Therefore, when evaluating the impact of inflation on an economy, it's essential to consider its level and how it relates to factors like consumer interest, wages, and overall economic health.
