Investments will decrease due to inflation. Uncertainty may be greater, both for businesses and households, in the event of inflation. Companies are no longer sure what their costs will be or what prices they will get for selling their products in the future and may therefore be reluctant to invest. The right time for a company to expand its business is when economic conditions are characterized by low inflation (Inflation, nd). It is easy for businesses to plan their activities and investments well. Most of the time, investment planning of large companies can cover the next few years (What is inflation and how should it affect my investment?, 2009). There will be less investment during high inflation because the company's costs will increase faster than the revenue the company receives. High inflation causes a lot of uncertainty in business planning because monetary value changes and businesses cannot guarantee their future costs or revenues. This will have negative implications on the economic growth of the economy. The consequence of inflation is that people will expect prices to rise and then consume more to avoid higher costs. Because local traders will hide stocks or take advantage of the situation where oil prices rise to increase prices of goods. The increase in the price of crude oil pushed Malaysia to a 26-year high inflation rate in June 2008 (Lesova, 2008). During this period, the price of oil increased to USD 145 per barrel (Crude Oil Price History, nd), causing Malaysia to face inflation of 7.7 percent in June 2008, then increasing again to 8.5 percent in July 208 (ssquah, 2008). The increase in the price of natural resources affected the increase in the price of gasoline by 40% to RM2.70/liter and the increase in the price of diesel by...... middle of paper ... ...the government creates new money to cover what it spends in excess of its revenues. The government wants to spend but doesn't want to raise taxes, so it prints more money. When the government prints more money, people don't have to pay extra taxes, but ultimately they realize that the money is no longer worth what it was before. When spending exceeds what the government can repay and offset by printing money, they will lose their credit rating and have to pay higher interest on their debts. The money supply must keep pace with the size of the economy. If money is printed at a faster rate than the economy grows, there will be inflation as the value of the currency declines. Since each ringgit is worth less, more is needed to buy the same things, so prices increase. The more money representing the same amount of wealth, the less each ringgit is worth.