Inflation represents a general increase in prices and a consequent fall in the purchasing value of money.
Inflation is measured as a percentage rate and not as an absolute measure. This is important: just because after a period of above-average inflation the inflation rate then falls this does not mean that prices then return to their original level or that a currency regains its original value. For that to happen a period of deflation is required. Deflation represents a general fall in prices and a consequent increase in the purchasing value of money.
Inflation is considered problematic if excessive as it destabilises a currency and economic relationships within an economy e.g. those on fixed incomes might see a fall in the real value of their earnings whilst those owed money might see that value of their assets fall.
Conversely, an absence of inflation is also seen as problematic. Psychologically people like to think their income is increasing, even if only in monetary terms. They are also inclined to put off spending if they think prices are stable are falling. Stagnant or falling prices are considered poor incentives for growth.
As a consequence, it is commonplace for the agency tasked with delivering monetary policy for a jurisdiction to be tasked with delivering a low rate of inflation rather than no inflation. 2% is commonplace, but there is no particular reason why this was chosen: a higher rate might be just as effective. The target is totemic rather than of merit in itself.
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