In the past, some argued that inflation is desirable to a certain extent in order to further stimulate economic growth, or that firms’ activities would become more vigorous under inflation. The 50 years of postwar experience and the evolution of economic theories, however, have forced serious reconsideration of this argument. There is every likelihood that a mild inflation will eventually lead to full-scale inflation.
In addition, once inflation takes root, the achievements of business activity are masked by nominal increases in profits, and accordingly, technological innovation and improvement in productivity are likely to be discouraged. Actual examples demonstrate that, from a longer-term perspective, countries with stable prices tend to enjoy higher economic growth.