Why is High Inflation Bad?
It may seem a somewhat redundant question, but it is an important one to ask. If the purpose of economic growth is to increase people’s wealth and hence their standard of living, then high inflation is not good. This is due to the fact that unless an individual’s wage goes up faster than the inflation rate (the case for almost no-one in Egypt at current inflation levels), then they are becoming poorer. Inflation is particularly destructive in the context of high unemployment and widespread poverty — both characteristics of Egyptian society. It pushes people even further into poverty, increasing dependence on subsidies and fueling social discontent, especially when it is the price of food that is on the rise. Inflation-driven and in particular, food-driven social unrest has been rolling across the world over the last few months, with protests or violence witnessed in the Ivory Coast, Cameroon, Mozambique, Uzbekistan, Yemen, Indonesia, Somalia, Burkina Faso, Senegal, South Africa, Haiti,
