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Is inflation as important as people say?

While we hear an awful lot about the rate of inflation and what impact it can have on everyday life and the economy is it really as important as people make out or are there more important things for the economy?

Inflation is this the rate at which a product, service, cost or an income increases in the future and is vital for the prosperity of economies around the world. If for example products are increasing in cost by more than the average persons income then it can become a real issue in that at some point demand will slacken, economic activity will fall, unemployment grow and the economy will eventually slow down.

Once the economy slows down it is very difficult to kick start it again overnight and it can literally take months if not years in some circumstances to get the country back on to a growth path. Inflation eats away at the value of the pound in your pocket and unless it is controlled can have a serious impact on the future competitiveness of a country as a whole.

There are many ways to control inflation but the simplest is interest rates were by supply and demand can be controlled to a certain extent by allowing the authorities to take heat from the economy and inject demand where required.

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