Negative Causes of Inflation for Business Development

Inflation has reached hyperinflation levels having a date of several years, with a constant and rapid increase in the prices of each product; therefore, companies also experience a lot of problems and difficulties, because their sales in nominal value increase, but the real value of their income decreases, redirecting the behavior of consumers towards staple products, presenting more problems for those companies that are not in the food and basic services branch since the consumer allocates their investments to prioritized needs.

About this Arias (2013), says "inflation consists of a generalized increase in prices due to the increase of money in circulation". In context, the rise in prices is a consequence of inflation and not inflation itself. In this sense, inflation is a term of an economic nature, but it affects different aspects of communities, both social and political".

We can say that the concrete and immediate causes of inflation are diverse among which we can mention:

- When the money supply is greater than the supply of goods and services.

- When the production value of goods increases due to the increase in the price of raw materials, as well as transportation and other transfer factors.

- Updating of production costs due to the variation in the value of the purchase of raw materials in foreign currency.

- Uncertainty and nervousness on the part of the consumer to acquire the few products in the market, causing the seller to take advantage of this situation and increase the existing merchandise.

”It establishes the formal duties that taxpayers, responsible parties and third parties are obliged to comply with all these related to the tasks of inspection and investigation carried out by the Tax Administration".

To conclude, a process of uncontrolled inflation produces uncertainty in the market, with which many business projects and investments stop being developed while waiting for the bad times to be overcome, bringing as a consequence a diminished economic growth, sometimes null, which leads organizations to close their doors.

- Arias, G. (2013) Inflation and budget management in mixed companies of the oil sector in the municipality of San Francisco.