Inflation

Inflation is a key macroeconomic objective.

COSTS:

Reduction in purchasing power of the consumers - everything is rising in price and if incomes are not rising or not rising as much as the rate of inflation then people will experience in wealth.

Menu costs - essentially the cost of firms having to print and update their prices.

Shoe leather costs - If you have a fixed interest rate in a bank then the real rate of return on your savings will be decreasing as the rate of inflation rises so you have to spend time transferring money to the best bank account. Called "shoe leather" because it originated when you would have to physically walk around to transfer money. 

Fiscal drag - Income tax bands are not usually adjusted for inflation but wages may be and so workers may have to pay more tax if they are "dragged" into another tax band.

Reduction in competitiveness - Decrease in exports because they are now more expensive. Also, if goods are cheaper abroad, then imports may rise and this could cause a current account deficit for example. 

…