Inflation

Inflation is a rise in general prices of goods and services in an economy over a period of time. Each unit of currency buys fewer goods and services. Inflation erodes the purchasing power of money. There is a loss of real value in the value of exchange.

Central banks attempt to stop severe inflation, along with severe deflation, in an attempt to keep the excessive growth of prices to a minimum. 

Inflation is usually caused by demand and the amount of money people have at their disposal. Inflation encourages people to spend rather than save, which only pushes the prices higher again.