Question

What is the definition of inflation?

Answer 1

I am assuming you are talking about market inflation, which is the rate in which goods and stocks prices rise.As a result of inflation, the purchasing power of a unit of currency falls. For example, if the inflation rate is 2%, then a pack of gum that costs $1 in a given year will cost $1.02 the next year. As goods and services require more money to purchase, the implicit value of that money falls.

Answer 2

Inflation vs Deflation
Most of us don't stop to think about it, but the value of a dollar is always changing. It swings up and down with the financial fortunes of the United States. Sometimes a dollar is worth more than others, and sometimes it seems like a dollar is worth nearly nothing. The differences in the value of a dollar from one point to another are caused by inflation and deflation.
Inflation
When a dollar buys less than you would expect it to, we call that inflation. Inflation is caused by a variety of factors, but most of them are related to interest and debt.

When the Federal Reserve bank raises interest rates, it causes the dollar to inflate. There is more money in the system, so every dollar is worth just a little bit less.
Deflation
Deflation is the opposite of inflation. When there are fewer dollars to go around, every one of them is worth more in terms of real goods and property. Deflation comes about when interest rates are low, and when the economy is performing better than the rest of the world. Deflation makes it cheaper to buy things in the store, but companies who sell their products overseas often see a slowdown in sales.