The prices for goods and services will likely change anytime in a marketplace economy. Some prices may increase while others may decrease. Hence, the term inflation refers to a significant rise in the costs of goods and services. With time, it is determined that inflation minimises the value of a currency. When inflation escalates, consumer spending decreases since individuals can’t afford to purchase as much.
In the past decade, the rapid increase in greenhouse gas emissions has become one of the globe’s leading issues. Based on some research, it was discovered that macroeconomic variables are vital contributors to environmental degradation. Generally, inflation results in sluggish movement of economic activities, consequently lessening the pressure on the environment. Economic activities conducted by humans are the key suspect of environmental degradation.
Higher demand for goods and services leads to high inflation. Subsequently, the high cost of inflation minimises the purchasing power of customers due to the reduction of real income, slowing down economic activities. As a result, pressure on the environment is minimised, and environmental quality begins to improve. It is evident that inflation affects aggregate demand, though it results in improved environmental quality.
Studies have proven that higher inflation instability minimises environmental pollution, arguing that higher costs establish economic uncertainty that hinders investment plans and spending, thereby enhancing environmental quality. It is also discovered that a negative correlation exists between inflation and ecological quality, which shows that a reduction in inflation instability leads to higher carbon dioxide emissions causing air pollution.
Instead of settling for high inflation to reduce environmental pollution, Refork has resolved to manufacture products from elements already existing in nature. The products are 100% bio-based and fully biodegradable, leaving no traces of microplastics behind. Therefore, companies should focus on producing biodegradable and sustainable products to avoid linking inflation to the environment.