What is inflation?
Inflation is the rate at which prices rise over time, reducing the purchasing power of money. At 3% annual inflation, something costing $100 today will cost $134 in 10 years and $181 in 20 years.
What inflation rate should I use?
Long-term average CPI inflation: USA ~3%, UK ~2.5%, South Africa ~5%. For conservative planning, use a slightly higher rate than the current official figure.