Inflation is the rate at which prices rise across an economy, which means the same amount of money buys less over time.
It matters for planning because it separates nominal returns from real ones. Money earning 5% while prices rise 4% grew by 5% on paper but only about 1% in purchasing power. This is also why cash sitting idle loses value quietly: the number in the account stays the same while what it can buy shrinks. Any long-term projection that ignores inflation will overstate how far the money goes.