Inflation is the changing of prices and the reduction in purchasing power an individual has on a certain market basket, or in non economic terms the goods and services sold on a market at a given price. The changes in prices of the basket is the inflation rate.
Looking at inflation in baseball is something that I recently helped Kevin Creagh of The Point of Pittsburgh in calculating. In short, the sum of the opening day payrolls in baseball are the given market basket. The calculation of the Baseball Price Index (BPI) is the same calculation of the Consumer Price Index (CPI, and an index of market baskets in the economy).