Inflation is a measure of the speed at which the price of goods and services increases. As inflation increases, the value of your money is lessened, since each dollar you have purchases less and less as time goes on.

As an example, if inflation is at 5 per cent, then a $100 iPod will cost you $105 in a year. Inflation can be devastating if it is not matched with an increase in wages or funding, and it is seen as prudent to have safeguards in place to defend against it.