 TITLE: What Is Inflation? CONTENT: How Inflation Affects Your Money\n--------------------------------\nInflation weakens the purchasing power of your dollar. This means you pay more to buy goods and services than you did, say, in the previous month or previous year. For instance, Americans might see the price of a gallon of whole milk rise 30 cents in a one-year period. Or motorists may feel the pain at the pump, with the price of a gallon of unleaded gas soaring $1 during a one-year span.\nInflation can also harm people who keep cash in savings accounts. Why? Because the value of the saved money goes down when inflation is high. Even though your money will earn more if inflation pushes interest rates up, you may have to use your savings to compensate for the higher prices of goods. Inflation also can water down the value of money you've been holding in fixed-income investments like bonds and certificates of deposit (CDs). END