[majinuub]

I'm seeing some rather naïve explanations here like it incentivizes spending and encourages economic growth.

There's absolutely no need to artificially incentivize spending. Humans naturally require and desire goods and services. Allowing people to store their economic energy without risk of devaluation would actually help bring people out of poverty. Inflating the money supply incentivizes high time preference behavior like excessive spending and borrowing. This leads to boom and bust cycles, and an increasingly growing wealth gap.

All inflation does in terms of growth is increase the nominal value of things in the economy. It does not encourage the growth of real wealth. The increase of wealth we experienced is due to the markets functioning despite an inflationary monetary policy and excessive regulation.

The real reason why the government is in favor of a "slightly inflationary" monetary policy is because they're incentivized to do so. They can spend it before price adjustments due to the new inflows of cash can happen in the wider economy. Its essentially a hidden tax. Governments, central banks, and their political/economic allies can benefit from this effect at the expense of everyone else in the economy.

https://en.wikipedia.org/wiki/Richard_Cantillon#Monetary_the...