How does inflation impact global trade and the interpretation of economic indicators?

Inflation refers to the general rise in prices of goods and services over time, which can significantly impact global trade. When inflation is high in a country, its products become more expensive for other countries to buy, leading to a decrease in exports. For example, if the price of a country's electronics rises due to inflation, foreign buyers might look for cheaper alternatives elsewhere, reducing the country's trade balance. Additionally, inflation can distort economic indicators like GDP and unemployment rates, making it harder to understand the true health of an economy. Therefore, businesses and governments must consider inflation when analyzing trade opportunities and making economic decisions.