Inflacion
In short
Inflation is the steady rise in the prices of goods and services across an economy. This process reduces the amount of stuff you can buy with the same amount of money.
In plain words
Prices for things like bread, petrol, and rent go up over time. Because things cost more, your savings and wages do not go as far as they used to. This means your money loses its value.
A simple example
If a loaf of bread costs £1 today, but costs £1.10 next year, inflation has occurred. You now need more coins to buy the exact same item.
Why it matters
It affects how much people can afford to live on and how businesses set their prices. Central banks try to keep it at a low, steady rate to keep the economy stable.
Easy to mix up
Do not confuse it with deflation, which is when prices actually fall.