Inflation measures how much, on average, the prices of what we buy go up. Here it is the euro area’s official index (HICP), as the change versus a year earlier: 2% means prices rose on average by 2% over twelve months. Keeping it around 2% is the European Central Bank’s main goal: when it climbs too high, the ECB raises rates to cool it; when it’s too low, it cuts them. Inflation erodes the purchasing power of savings — which is why an investment’s “real” return (net of inflation) matters more than the nominal one.