Inflation is the general increase in prices over time, meaning each unit of currency buys fewer goods and services than before. For investors, inflation is the silent enemy: if your investment return is lower than the inflation rate, you are losing purchasing power even if your nominal balance is growing.
Real return = Nominal return − Inflation rate. A deposit earning a nominal 20% in a year of 25% inflation has a real return of −5% — your money buys less than it did before, despite earning interest. Staying ahead of inflation is the minimum bar for any savings strategy.