Why is inflation such a problem? The effects inflation at first glance can be

rather unnoticeable however over time it gradually builds up and starts to corrode your savings.

It creates uncertainty in terms of what the money you earn today will buy tomorrow.

Uncertainty, in turn, discourages productive activity, saving and investing.

Example of Inflation

Inflation in the UKRPI(Retail Price Index) inflation slowed to 0.9

per cent in December, down from 3.0 per cent in November.

CPI dropped to an annual rate of 3% in January from 3.1% in December.

The Bank expects CPI to drop as low as 0.5% this year and to remain well below its 2% target until 2012, even if interest rates are cut further.

Inflation in developing countriesSome developing countries struggle with

high rate inflation.Zimbabwe as the highest inflation rate

(consumer prices) (%) in the WORLD which reaches 26,470 which is ridiculously high as that is 10,000 times the inflation here in the UK!