What is inflation?
Inflation is the increase in the supply of money; inevitably, it leads to higher prices. Most people are under the impression that it is increased prices that are inflation. The blame for inflation is often — and it's miraculous that people believe it — pegged to greed, and to foreign economies. The truth is that prices rise for three possible reasons, assuming all other factors remain constant: a) an increase in the money supply, i.e. inflation; b) a decrease in the supply of the particular product; or c) an increase in demand.