Inflation is the increase of products price, people's purchase of goods from outside.When there is inflation in a country people will buy from outside, domestic market of many products will decrease. As the domestic market starts to decline - country's goods producers will try to decrease their products price. Then the country people will buy from their home producers again. Finally price of domestic goods will go down.So we can say that inflation may affect balance of payment negatively for a small period of time, but in the long run its impact gets mitigated.