Contemporary mainstream economics makes abundant use of formal models that specify what precise quantity is being maximised, and assume that agents make efficient use of whatever information is available. While such assumptions are extremely useful for developing insights into how the world actually functions, nobody believes them literally. “Utility” for instance, (sane) economists will accept, has no well-defined physical counterpart.
While businesses can try to pass on higher input costs by raising prices, inflation creates uncertainty that can affect investment decisions. In the long term, this puts downward pressure on productivity and prevents businesses—and the economy as a whole—from growing. Although CPI inflation came in slightly lower in July, this drop was due mostly to gasoline prices.