This is a question often asked by clients, especially those with medical insurance.
Inflation loosely termed is the change in buying power $1 has today vs. a point in time in the past. The Reserve Bank is under instruction from the government to keep this in a band between 1% and 3% per annum.
The best lever for the Reserve Bank to use to manage this is the interest rate, which is why it gets a lot of focus.
Inflation rates help drive the decisions the Reserve Bank makes on interest rates. (In a very simplified way)