Inflation Affecting Business is a term used to describe the process by which the prices of goods and services increase over time. This means that businesses are forced to pay more for supplies, materials and labour, resulting in increased costs in their production processes. The impact of inflation on business can be substantial – when inflation rises faster than a company’s profits, it can lead to serious financial losses and even bankruptcy. Inflation negatively affects profitability, as rising prices make it harder for businesses to remain competitive and increase their profits. Companies must therefore take steps to manage and offset the effects of inflation in order to survive in today’s economy.