Inflation refers to the sustained increase in the general price level of goods and services over time. In the global economy, moderate inflation supports growth by encouraging spending and investment. However, high or unpredictable inflation reduces purchasing power, increases production costs, and creates uncertainty in international trade and investment. It can lead to higher interest rates as central banks attempt to control rising prices, slowing economic growth. Inflation in major economies can also affect global commodity prices and exchange rates, influencing both developed and developing countries worldwide.