Inflation, the money supply is far greater than the actual amount of money needed, leading to a decline in purchasing power. It costs more to buy the same product. Banks will tighten credit, raise interest rates and withdraw funds, and the interest rate of bank deposits will rise, and the interest rate of loans will also rise, leading to an increase in risk-free interest rates. (Economics)

Inflation leads to a decline in purchasing power, and the income from selling the same assets at the end of investment is greater than expected, that is, the income obtained at the end of discount is higher than expected. In order to convert the actual income at the end of the period into the initial investment amount, a higher discount rate is needed, and the increase of this discount rate is reflected in the increase of risk-free rate of return. (financial management)