Inflation

Why is unexpected inflation a societal problem?

Inflation is the rise in prices of most goods.  Suppose you loan a friend $100 dollars and he will repay you the following year.  Lets also assume that there is a constant annual inflation rate of 10%.  You would expect him to pay you an interest of at least 10% to cancel out the loss of value in that 100 dollars you loaned him.  In reality though, there is no constant anual inflation rate.  Thus being said, people must predict inflation based on statistics.  If you assumed that the inflation rate was 10% and demanded 110 dollars the following year, but the value only inflated by 4%, then your friend is losing an extra 6 dollars.  Although you may come out richer than before, your friend came out poorer.  On the other hand, the value of a dollar may have inflated by 15% instead of 10%.  In this case, you lost 5 dollars.