Inflation Simulation in Capitalism Lab

Experience the intricacies of economic inflation firsthand with our Capitalism Lab inflation simulation. Gain valuable insights into the effects of rising prices, monetary policies, and market dynamics. Discover how inflation impacts industries, consumers, and the overall economy.
When you start a new game with the inflation option enabled, inflation affects virtually everything that has a monetary value, including product prices, land costs, building costs, salary costs, firm operating costs and etc.

Aiding the player to automatically adjust prices based on the inflation

You can let the AI automatically adjust selling prices of all your products for you, as well as adjusting all your advertising spending to catch up with the inflation. To do so, set up a CEO office in your corporate headquarters and enable the options “Regularly adjust prices based on inflation” and “Adjust advertising spending based on inflation“.

Special “Inverse Inflation” mode

There is a special mode called “Inverse Inflation” where cash loses its purchasing power as a result of inflation. The Purchasing Power Index starts at 100% and diminishes over those years with inflation. All cash and loan amounts will shrink in accordance to this Purchasing Power Index.

So if you just hold cash and do not make investments, you will see your cash dropping in value and their purchasing power. You have to pro-actively invest your cash into assets in order to prevent your wealth from shrinking.

It is a fact that your cash always loses its purchasing power in the face of inflation, whether the inflation mode is set to the normal mode or the inverse mode. But psychologically, you may sense a great impact of inflation when it directly shrinks the value of your cash.

In contrast, deflation lifts up the purchasing power of your cash and you will see your cash amount increase during the times of deflation. So you may want to liquidate and hold as much cash as possible under deflation.

Loans are opposite to cash. Your outstanding loan amount decreases under inflation, and increases under deflation. So it is a smarter move to take loans when inflation is rampant and repay loans when deflation surfaces.

Under the “Inverse Inflation” mode, even if you do nothing, your cash amount will decrease, whereas the values of your land & resources assets are not affected by inflation.

To enable the “Inverse Inflation” mode, select the Environment page from the New Game Settings menu and set the Inflation setting to Inverse.

Reissue of Banknotes

When the inflation has reached 100 times (10000%), banks will reissue new banknotes of smaller value (1% of current value), deflating all the currency on the market to make the current figures more manageable under the effect of inflation.