What is inflation and how does it affect our savings?

Inflation is the measure that indicates how the prices of goods and services in an economy change during a given period of time. Let's say we have €100 today and there is 2% inflation per year, after 5 years these €100 will have the purchasing power of €90. As can be seen in this example, inflation causes the progressive loss of purchasing power, which is why it is important to invest and put our money to work with the aim of beating it.