Inflation is an economic concept that occurs when money loses its purchasing power over time. This means that a currency’s value decreases and prices for goods and services increase accordingly. For businesses, inflation can have a major impact on their operations and profitability. Companies must adjust to rising costs of production by raising their prices in order to remain profitable. Furthermore, they may need to invest in more efficient processes and technology in order to reduce the cost of producing products or services. Finally, businesses must be mindful of consumer demand and make sure not to price their products too high in order to avoid a decrease in sales volumes. All in all, understanding and managing the effects of inflation on businesses is essential for long-term success at any level.