What are the Non-Economic Consequences of Inflation?


Inflation has far reaching social, moral and political consequences:

1. Social Effects:

Inflation is socially unjust and inequitable because it leads to redistribution of income and wealth in favour of the rich. This widens the gap between haves and have-nots and creates conflict and tension in the society.


2. Moral Effects:

Inflation adversely affects business morality and ethics. It encourages black marketing and enables the businessmen to reap wind-fall gains by undesirable means. In order to increase the profit margin, the producers reduce the quality by introduction of adulteration in their products.

3. Political Effects:

Inflation also disrupts the political life of a country. It corrupts the politicians and weakens the political discipline.


Again, social inequality and moral degradation resulting from inflationary pressures lead to general discontentment in the public which may result in the loss of faith in the government.

General dissatisfaction among masses may sometimes result in political revolution or toppling of the govern­ment. It was the hyperinflation in Germany during 1920s that made Hitler a dictator. It is correctly remarked: “Hitler is the foster-child of inflation.”

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