Inflation has a deep impact on the distribution of income and wealth in a country. It results in the redistribution of income and wealth because prices of all the factors of production do not increase in the same proportion. Generally, inflation always inflicts more injury on the fixed income groups like workers, teachers, pensioners, interest and rent earners etc.
because their incomes do not increase as fast as the prices. On the other hand, flexible income groups such as businessmen, traders merchants etc. suffer less injury due to windfall profits that arise because prices rise faster than the cost of production.
