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It makes certain items accessable at specific times. E.g. pipe upgrades cost around 18,70,300 gold.
If there was no inflation, it would mean you might be able to upgrade your pipe to lvl 3 very early on. Or boats. As you‘re low leveled you shouldn‘t be able to buy a heavy armored boat.
From a strategic way of looking at it, you have to time spending your money. You‘re money will suddenly be worth less - so buy things while they‘re still affordable. FTK is basicly an influation-simulator 😂.
From a story-sided perspective it also makes sense: As Fahrul gets drowned in chaos and mean criminals, the supply of food and goods becomes limited resulting in a rise of prices.
That just what you‘d expect in the real world if everyone suddenly demands something specific, supply will shrink, making prices rise.
Just fyi: You can tone the rate of inflation down in the house rules. :-)