Sample Essay

The saying “inflation only benefits the rich” is true due to the following reasons. Firstly we have to realize that the low income earners in any economy are in most cases casual workers or workmen who are not permanently employed. These people in most cases may take even ten years before seeing their salaries increase.

This means that as the rate of inflation rises, these people may officially become poorer.

In addition it is evident that the rich in most cases buy goods or services in bulk. As a result they are not directly affected by inflationary pressures because in many cases only the retail price of goods increase slightly and not the bulk price. In addition it is right to say that the rich own the businesses. Thus even as the price level increases then it means that they will earn more from the sale of the same goods.

By doing this then an increasing inflation would make the rich become richer while the poor would become poorer. In times of inflation there are times when governments offer tax reliefs. When this happens the poor rarely gain anything while the rich who pay the taxes get the relief’s thus gaining even more.

Regardless of this fact a very high inflationary rate can also be harmful to the rich, since they will have more to lose if their assets were to be rendered worthless

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