What Drives Prices in Egypt? An Analysis in Light of International Experience

Publication Number: ECES-BK11-E

September, 2009

Author : Edited by Hanaa Kheir-El-Din

Type : Books

High inflation is costly to an economy, with implications for both income and wealth. It erodes real income of fixed nominal income earners, especially civil servants and pensioners. Unanticipated inflation redistributes wealth from creditors to debtors, helping borrowers and hurting lenders. Inflation impairs economic efficiency because it distorts price signals. By making it harder to distinguishbetween changes in relative prices and changes in the overall price level, inflation can also lead to a misallocation of resources.