According to my textbook, in the chapter on inflation,

"When a price rises, buyers of that good must pay more, but sellers get more revenue when they sell it. The loss in buyers' purchasing power is matched by the rise in sellers' purchasing power."

I understand the part of falling purchasing power for buyers (since each dollar can now buy less compared to previously), but why so for the seller? For instance, suppose each orange was sold for 1 dollar in the past. The price then rose to 2 dollars (reflecting the rise in general price level in the economy) - but if 2 dollars post-inflation is worth the same as 1 dollar before the price rise, then there really is no change in the sellers' purchasing power right? When the seller uses the 2 dollars to buy other things, it will still fetch him the same as 1 dollar did previously!

I'm not sure if I'm missing something here, and would really appreciate some clarification, thank you!

  • $\begingroup$ Which text book is it ? Your comprehension may be correct depending on omissions. $\endgroup$ – keepAlive Dec 26 '19 at 9:08
  • $\begingroup$ @keepAlive it's "Economics: Principles & Applications" 6th edition by Robert E. Hall and Marc Lieberman (pg. 580). $\endgroup$ – Charlz97 Dec 26 '19 at 13:09

Am not a trained economist, but I would think this may be a temporary effect. A merchant may sell his newly purchased items for $2. Scruples aside, he could sell his existing inventory of that item (purchased at the pre-inflation wholesale price) at the post-inflation retail price. Again, an opportunistic, but temporary, advantage.

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