Inflation can have a profound effect on a country’s economy, leading to increased prices, decreased purchasing power and decreased investment returns. Negative effects of inflation include an increase in the cost of living, which decreases the value of people’s salaries, savings and investments. This can lead to stagnation in wages and savings due to stagnant economic growth. In addition, inflation can cause businesses to struggle as their profits decrease and they become unable to grow. Furthermore, higher inflation may lead to a decrease in government revenues and an increase in government debt levels, creating further difficulties for a country’s budget.