This paper aims to define the correlational relationship between two major phenomenon; inflation and standards of living that exist and dictate the happiness among the citizens in an economy. It explains step by step how each variable works and affects other variables and the weight of influence it carries. Both qualitative and quantitative approaches are taken to prove the point that there is a correlation in the first place. Inflation is discussed on how it affects an economy and the standard of living for its citizens later on in this paper. Inflation can be measured for an economy using the percentage change in the consumer price index and the standard of living can also be measured with variables like real GDP per capita and Human Development Index