Inflation is the general increase in the prices of goods and services over time, which reduces the purchasing power of money.

Debtors benefit from inflation because repay their loans with money that is worth less in real terms than when they borrowed it.

This reduces the real value and the real interest rate of their debt.

Creditors, on the other hand, lose from inflation because they receive money that is worth less in real terms than when they lent it.

Persons with back savings and persons who lived on fixed pension funds also lose from inflation because their savings and pensions do not increase in line with the rising prices, and thus their purchasing power declines.