https://www.investopedia.com/ask/answers/111314/what-causes-inflation-and-does-anyone-gain-it.asp >>KEY TAKEAWAYS >>Inflation is a measure of the rate of rising prices of goods and services in an economy. >>**Inflation can occur when prices rise due to increases in production costs, such as raw materials and wages.** >>A surge in demand for products and services can cause inflation as consumers are willing to pay more for the product. >>**Some companies reap the rewards of inflation if they can charge more for their products as a result of the high demand for their goods.** https://pic8.co/sh/J4J14V.gif ... >>Wages also affect the cost of production and are typically the single biggest expense for businesses. When the economy is performing well, and the unemployment rate is low, shortages in labor or workers can occur. Companies, in turn, increase wages to attract qualified candidates, causing production costs to rise for the company. If the company raises prices due to the rise in employee wages, cost-plus inflation occurs. >>**Natural disasters can also drive prices higher. For example, if a hurricane destroys a crop such as corn, prices can rise across the economy since corn is used in many products.** ... >>Expansionary Fiscal Policy >>Expansionary fiscal policy by governments can increase the amount of discretionary income for both businesses and consumers. If a government cuts taxes, businesses may spend it on capital improvements, employee compensation, or new hiring. Consumers may purchase more goods as well. The government could also stimulate the economy by increasing spending on infrastructure projects. **The result could be an increase in demand for goods and services, leading to price increases.** >>**Expansionary monetary policy by central banks can lower interest rates. Central banks like the Federal Reserve can lower the cost for banks to lend, which allows banks to lend more money to businesses and consumers. The increase in money available throughout the economy leads to more spending and demand for goods and services.** ... >>Who Benefits From Inflation? >>While consumers experience little benefit from inflation, investors can enjoy a boost if they hold assets in markets affected by inflation. For example, those who are invested in energy companies might see a rise in their stock prices if energy prices are rising. >>Some companies reap the rewards of inflation if they can charge more for their products as a result of a surge in demand for their goods. If the economy is performing well and housing demand is high, home-building companies can charge higher prices for selling homes. >>In other words, inflation can provide businesses with pricing power and increase their profit margins. If profit margins are rising, it means the prices that companies charge for their products are increasing at a faster rate than increases in production costs. >>Also, business owners can deliberately withhold supplies from the market, allowing prices to rise to a favorable level. However, companies can also be hurt by inflation if it's the result of a surge in production costs. Companies are at risk if they're unable to pass on the higher costs to consumers through higher prices. If foreign competition, for example, is unaffected by the production cost increases, their prices wouldn't need to rise. As a result, U.S. companies might have to eat the higher production costs, otherwise, risk losing customers to foreign-based companies.