Which economic group is likely to struggle during inflation?

During periods of inflation, individuals or groups on fixed incomes often face significant challenges. A fixed income refers to a stable salary or payment amount that does not increase with inflation, such as pensions or social security payments. When inflation occurs, the general price levels of goods and services rise, meaning that the purchasing power of those fixed payments diminishes over time. As a result, individuals relying on these fixed incomes cannot afford to buy the same amount of goods and services as they could previously, leading to financial strain and difficulties maintaining their standard of living.

In contrast, those with fixed loans may find their debt repayments remain constant, making them less affected by rising prices in terms of their loan obligations. Savers may also experience a reduction in the value of their savings due to inflation but may not face the immediate financial strain that fixed income earners do. Individuals with investments in stocks might even benefit from inflation if the companies they invest in are able to raise their prices and maintain profitability. This context emphasizes why those on fixed incomes are particularly vulnerable during inflation.