Inflation is hard to pin down exactly but generally assumed to originate one of two ways:

• demand-pull inflation: resulting from a rapid increase in credit and/or the money supply
• cost-push inflation: rising fixed costs for wages, raw materials or imported goods.

An increase in the rate of inflation:

• benefits debtors and costs lenders, at least until they renegotiate the terms of lending. In the long run (once people have adjusted to the new rate of inflation) the rate of inflation, in theory, has no lasting effect on anything (a concept known as the neutrality of money?).
• lowers the real return (in purchasing power) of holding bonds, and thus lowers the price of bonds.
• generally causes stocks to decline.
• generally increases the nominal rate of interest paid for loans and credit.

A decrease in the rate inflation (disinflation) has the opposite impacts.

Bank of Canada - working paper.

"There is broader agreement that the benefits of low inflation are more dispersed across the economy than are the costs of disinflation. This naturally makes the policy of reducing moderate inflation—for example, a reduction of inflation from 8 per cent to 2 per cent—a difficult policy to defend in public debate. The costs of disinflation are sharp and obvious; the benefits are diffuse and subtle. This dilemma, of course, is not unique to the conduct of monetary policy; policies that involve “short-term pain for long-term gain” are usually difficult to push through the political system."