Less Spending Power

• Inflation means that the cost of everything, from everyday items to luxury products, experiences a gradual rising in price. If you're not making more money than you were last year, your purchasing power is slowly being chipped away. This might not seem like much in the short term, but year after year this results in those with static income being unable to maintain their standard of living.
  
  

Stock Market Jitters

• A stable stock market is a good thing for most people's savings and investments. Inflation causes problems in the market at times. The stock market is often influenced by predictions over what will happen in the distant future. Worries about the long-term problems created by inflation can cause panic in the stock market and result in unpredictable fluctuations that damage investor's wealth and hurt their trust in the market.
  
  

Rising Interest

• Inflation is considered a normal economic effect, but governments and banks want to control it and keep it from rising too quickly. Inflation that happens too quickly is destructive because earnings don't keep pace with costs. To control and moderate the effects of inflation, interest rates may be increased. This is beneficial for those who can afford to save some money. However, for those who depend on borrowing, increased interest rates can make it much more difficult to pay back a loan or mortgage.
  
  

Savings

• Inflation also damages the value of savings. Sometimes, savings grow at a very slow rate depending on how the money is invested. If the rate of inflation starts to outpace the growth of investments, those investors lose money every day that goes by. Federal policy makers take steps to limit inflation so retirees don't suddenly find themselves unable to sustain a life based on savings or a pension.