Prices of goods and services change at different paces. Some, such as the prices of traded commodities, change every day; others, such as wages established by contracts, take longer to adjust. In an inflationary environment, unevenly rising prices inevitably reduce the purchasing power of some consumers, and this erosion of real income is the single biggest cost of inflation.
Inflation can also distort purchasing power over time for recipients and payers of fixed interest rates.
