(i) Discourages savings since people use their earnings on consumption.
(ii) Increase in the interest rates hence high cost of borrowing.
(iii) Low standards of living especially for people with fixed incomes because the value of their earning is eroded by inflation.
(iv) Money lenders loose real value of money if the interest rate does not change accordingly.
(v) Social political/ unrest especially among low income earners.
(vi) Worsening balance of payment since exports become expensive.
(vii) The gap between the rich and the poor widens, the rich become richer at the expense of the poor.
(viii) Hampers effective implementation of development plans since the cost becomes higher than precedented.
(ix) Loss of coincidence and the local currency leading to the use of foreign currency.
maurice.mutuku answered the question on July 19, 2017 at 13:48
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