the example you give is not correct and is not about deflation.
In fact, deflation may also be good for the economy as the aforementioned XYZ company will have more value for their 99 rupees (eq to 105 rupees present) than their 100 rupees present cost. Since everything else will also be cheaper, XYZ co will be able to buy more for that 99 INR although on paper, they can show losses just because profit/loss calc does not take inflation into consideration and is based on absolute figures.
Too much inflation is not good for the economy as you can see from the real estate sector where we say prices are inflated. This is leading to costs of companies going up and India is well on the way of losing a lot of business as given in this article itself.
A little inflation is good in the sense that when you park your money in the bank, you expect some earning. Similarly, banks would also expect earnings on loans. Otherwise, financial institutions cannot operate. Thus, inflation is good for financial institutions.
However, inflation is very bad for retired people, etc, who have a fixed sum as assets and that fixed sum loses its value each day because what they could get for 100 rupees earlier costs maybe 160 rupees today.
When my father started his career many decades back, he used to earn 140 rupees each month. however, with that 'small' amount, he could buy a lot of things. unfortunately, his salary at the time of retirement was several times more but he struggled to buy the same.
