How Increased Inflation Affects Businesses
How Increased Inflation Affects Businesses

Summary/Abstract: Inflation affects the business in many ways and its impact is reflected in the overall operation and life of the business. It has the most significant effect on changes in the prices of inputs and outputs, while these changes are generally uneven. The aim of the article is to evaluate the past and to simulate the possible future development of the financial situation of businesses in an environment of increased inflation and uncertainty in the SR. First, through the available statistical data, we point out that, on average, businesses were able to transfer rising costs into sales. We then carry out a simulation of future development based on two scenarios. We mainly simulate two types of shocks – cost growth and demand decline. According to the findings, a sharp and uneven increase in prices can negatively affect some businesses and disrupt the structure of the business sector. As we also document, the impact of inflation on businesses is heterogeneous.

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