Most likely to be affected by inflation because if customers have less to spend they start to look at cheaper alternative products
Manufacturers of premium products can react by reducing prices (although they have to be careful not to reduce them so far that the product loses its premium image)
Manufacturers of premium products can react by investing heavily in advertising
Periods of high inflation
Can be a good time for firms to expand if interest rates are lower than the rate of inflation
When the UK interest rate is high or fluctuating
Firms tend to expand into countries with low, stable interest rates, as it's cheaper to borrow money for expansion there
It's hard for a business to plan when inflation is high. It needs stable prices to make accurate forecasts
