High inflation can cause three main problems:

It hurts people on fixed incomes (e.g. pensioners, students) by reducing their purchasing power. This has a significant effect on GDP.

Rising inflation can prompt trade unions to demand higher wages, under the circular logic that wages must keep up with inflation. (Of course, rising wages can help fuel inflation.) In the case of collective bargaining, wages will be set as a factor of price expectations (Pe). Pe will be higher when inflation has an upward trend. This can cause a wage spiral. Also, if strikes occur in an important industry which has a comparative advantage, productivity could decline.

If inflation is higher in one country than in its trading partners', and that country maintains fixed exchange rates, then the country's exports will become more expensive abroad and it will tend toward a current-account deficit.