The new tsunami In Somalia (inflation)

Inflation creates distortion in the allocation of resources and definitely hurts certain groups. It tends to discourage saving and encourage consumption at fast rate to stay ahead of rising prices. Moreover, the declines of saving rate discourage the capital investment. Unfortunately, it means the economic growth at side of productivity tends to slow down, the fall in productivity means that the supply of new goods and services cannot keep pace with rising demands, putting further upward pressure on price leading to what is know as inflation. Read the whole artical