Inflation is simply a rise in prices. Over time, as the cost of goods and services increase, the value of a Rupee is going to go down because a person is not able to purchase as much with that Rupee as he could has last month or last year. In other word Inflations means paying more for goods than what you were paying earlier.

The effect of inflation is the prices of everything going up over the years.

A train ticket for Lucknowto Delhi was for a few paise in my dad’s time. Now it is worth Rs.500. My dads first salary for the month was Rs.300 and over the years it has now become Rs.85,000. This is what inflation is, the price of everything goes up. Because the price goes up, the salaries go up.