What is real interest rate here?
Nevertheless, now let's proceed to the case where you don't borrow. 5% inflation and 5% deflation. You already have 1000$ and your profit margin is the same 2%. Will you be profitable under inflation in real terms, and will you suffer losses under deflation?
We are running in circles. You always have to consider that you borrow, because you have to compare to what you would have obtained by NOT spending your money, but to place it on a savings account instead.
But if you like:
5% inflation (interest rate 10%). If you place your money on a savings account, you would have obtained $1100.
If you do your thing, you would have sold at 1070. You would have suffered a loss of $30 compared to placing your money.
5% deflation (interest rate 0%). If you kept your money, you would have had nothing, so in the end you'd have $1000.
If you do your thing, you would have sold at 970. You would have lost $30 as compared to keeping your money, again.