Inflation occurs as the prices of products increase in an entire industry or sector. Consequently, you would need more money to purchase these products thus the decline in your purchasing power over a period of time. Inflation can be contrasted with deflation, which occurs when prices decline and purchasing power increases. Economists look at inflation in small doses as a sign of a healthy economy. Inflation is also one of the reasons for people to either spend or invest their money. However, drastic inflation can cause destructive impacts as money being printed out is more than the growth of the economy which, drives the value of the money or currency down.