> When you can not raise prices as fast as your costs are increasing, the only viable option is to lower quality.
If you can't raise prices as fast as your costs are rising, it's a signal the market prefers reduced quality to higher prices for your product.
Deflation certainly isn't going to help you there, especially since it means consumers will expect you to actually drop your prices, with some even deferring purchases whilst waiting, and you'll struggle to borrow money when lenders reason that [i] you'll make less revenue next year and [ii] they don't need to risk lending money for it to be worth more than last year; they can just bury it in the ground...
Further to your point, deflation means you drop your prices separate to what your customers "want." Rather, customers are willing to pay less day over day as they require an incentive to spend their money over its risk-free return under their mattresses.
If you can't raise prices as fast as your costs are rising, it's a signal the market prefers reduced quality to higher prices for your product.
Deflation certainly isn't going to help you there, especially since it means consumers will expect you to actually drop your prices, with some even deferring purchases whilst waiting, and you'll struggle to borrow money when lenders reason that [i] you'll make less revenue next year and [ii] they don't need to risk lending money for it to be worth more than last year; they can just bury it in the ground...