Inflation is an important means for the bourgeoisie or the ruling class to strengthen the exploitation and plunder of grassroots working people. Inflation first brings profound disasters to workers and farmers. It makes prices keep rising and the purchasing power of money keep declining, which leads to a sharp drop in the real wages of workers and an increasingly poor life. However, farmers and other small producers have to buy the means of subsistence produced by capitalist industries at high prices, and sell their agricultural products and handicrafts at low prices, because in the process of rising prices, the "scissors difference" between industrial and agricultural products is getting bigger and bigger, thus becoming poorer.

Extended reading

Inflation has at least three hazards to people's life and economic development in China:

1. First of all, it will make the already unequal income distribution structure in China more unequal.

As we all know, inflation will reduce the actual living standard of consumers. But many people are not very clear that inflation has the greatest impact on the lives of low-income people. Owners of land, capital and other properties can reduce the loss of inflation by raising the prices of land and products in the midst of rising prices, and even gain some benefits from inflation. Because low-income people only have wage income (or pension income), and the increase of wage income not only lags behind inflation, but also can never compare with the increase of prices. This is why ordinary workers always feel completely powerless in the face of inflation. This situation is more obvious in China, where labor rights and interests are lacking.

2. It brings great uncertainty to investment and consumption.

This uncertainty will further distort China's already distorted economic structure. The price of commodities should be a signal sent by the market to producers, and producers can grasp the market demand for their products according to this signal, so as to increase or decrease the production scale accordingly and ensure better utilization of various social and economic resources. However, in the case of inflation, the rise of a commodity price is not due to the real demand of the market, but only due to the speculative impulse of producers or the panic of consumers about further price increase. Because not every producer can grasp the comprehensive information of the market, such speculation and panic caused by uncertainty are likely to promote unfounded further investment impulses. If the China government can't stop this round of inflation effectively and quickly, people will find that the phenomenon of over-investment and overcapacity accumulated for a long time in China will be more serious after a year of drought. China's efforts to adjust its macroeconomic structure will be even more difficult.

3. Inflation will hinder the improvement of labor productivity, thus reducing China's international competitiveness.

From the producer's point of view, in an inflationary period, the simplest way to make a profit is to raise prices; But also strive for a faster price increase for our products. Although in the end, repeated price increases will offset most or even all of the benefits brought by the price increase of its products, if not, the losses will be higher. The so-called "fish in troubled waters" price war is the only rational choice for enterprises in inflation. Since direct price increases can bring more benefits soon, no one will spend their energy on the research and development of new products, the application of new technologies and the improvement of labor productivity. China's economy is already an extension economy, and its scientific and technological content is not high. Internationally, we rely entirely on low prices to earn meager profits. Inflation will not only make China's economy unable to get rid of this low-end position in the international division of labor for a long time, but may even make China lose in the competition with other labor-intensive economies for international market share.