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In finance, the concept of Inflation Risk refers to the likelihood of a bond's value decreasing due to increasing inflation. This is a crucial factor to consider for investors, as inflation can significantly impact the purchasing power of the fixed interest payments received from a bond. As inflation rises, the value of these payments decreases, leading to a potential decrease in the overall value of the bond. This risk is prevalent in the bond market and must be carefully evaluated by investors to make informed decisions.