Question

Inflation that is sudden or unexpected tends to hurt which of these groups of people MOST?

Answer 1

Those affected by unexpected inflation area:

1.) THOSE EARNING A FIXED INCOME

Those whose incomes are not indexed to inflation are affected by unexpected inflation since their income remain constant yet the value of money has depreciated. And this means they will be able to buy fewer goods with the same amount of money.

2.) LENDERS

Lenders whose loans' interests are not indexed to inflation will suffer when an unexpected inflation occurs. This means that the money they will be paid back as the loan has a lower value compared to the money they lent. Thus they suffer losses.