Inflation is a sustained increase in the general price of goods and services in an economy. In other words, inflation reflects a decrease in the purchasing power of money.
1) Too Much Money Chasing Too Few Goods
When there is more money in the economy than goods and services available for purchase, prices will increase as people compete for limited resources.
2) Import Prices Increasing
When the cost of imported goods and services increases, this can lead to inflation as businesses pass on these higher costs to consumers.