LI spacing in IE vs Firefox

Why extra spacing in IE?

[carhire]

I've recently added a selection of list items on my site and reduced the margin and padding between them to about 1px. In Firefox this works well, it displays them nicely , close together. However, in IE there's a large space between each item, and reducing the padding or margin has no effect on this.

Is this a known issue with IE vs Firefox and if so how can I fix it?

[firstreflex]

Did you try this?

li{
display:inline;
}

[carhire]

It worked a charm. Thanks.

Question is (as I'm determined to learn from my mistakes) why?

Doesn't making the LI element inline just make it all want to run in a line, unlike a block element?