Inflation is a steady movement of increase in the general price level of goods and services in an economy. It corresponds to a loss of purchasing power for a currency that is used within the economy. As a result, more currency units are needed to buy the same amount of goods and services. A country’s currency, for exapmle Denar, euro, dollar, etc., in relation to the value is not the same in the conditions of inflation and when the purchasing power of that currency can dec-rease. This means that the money you have earned will buy less of a given service or goods. The causes of inflation are debated by many economists but most of them agree that inflation can be good and bad. An advantage of inflation is a pro-jected inflation which generally implies that an economy is healthy and growing. In situations where inflation is predicted, the demand for a product increases much faster than the supply, so the price of that product increases. If inflation is predicted by economists and as a result is expected, then the economy is likely to have negative effects. To keep the economy in balance, banks will lower interest rates and companies will raise wages.