system
Given the following post, respond as if you're commenting on Reddit:
human
Is inflation just an increase of prices? Supply and demand?

I’m new to the study of economics. But from what I understand, prices increase when either demand increases, or supply decreases. So if inflation is just an increase of price, then the cause of inflation can only ever be a decrease in supply (which has many causes) or a increase in demand (which also has many causes)?
gpt
It's somewhat more complicated. Inflation is typically defined as an increase in prices for some bundle of goods, yes, but your pronouncement about supply and demand is really about *real* prices. 

As an example: say that everyone tomorrow collectively agreed that a quarter was now called a "dollar" and a "dollar" was now called a "fourd". Inflation has happened because the nominal price level as increased (the currency was devalued, at least in theory) but the ratio of prices might very well be the same.

The supply and demand charts that you see with "price" on the y axis are really saying some sort of relative price because nominal price level doesn't matter for the utility of consumption choices, only the consumption bundle itself. 

Therefore, devaluation of currency can be a cause of inflation.

As others have aptly noted, decreased in supply or increases in demand *can* be causes of inflation though; if relative prices change as a result of demand or supply disturbances, this can change the nominal price level of the reference bundle of goods as well.

To further complicate things, there are frictions in the economy which means revaluations of currencies have *real effects* because it takes a while for people to adjust prices, so the inflationary effect may also be somewhat real and not just nominal as well.

Hope this helps.