Inflation is the idea—first proposed by Alan Guth (1981)—that the nascent universe passed through a phase of exponential expansion that was driven by a negative vacuum energy density (positive vacuum pressure). This expansion can be modelled by a non-zero cosmological constant. As a direct consequence of this expansion, all of the observable universe is posited to have originated in a small, initially causally-connected region. Quantum fluctuations in this microscopic region, magnified to cosmic size, then became the seeds for the growth of structure in the universe (see Galaxy Formation and Evolution).
Inflation resolves several problems in the Big Bang cosmology that were pointed out in the 1970's. Among these are the observed flatness of the universe (the flatness problem), its extraordinary homogeneity on large (non-causally-connected) scales (the horizon problem), and its lack of any observed topological defects (e.g., the monopole problem), predicted by many Grand Unified Theories.
Predictions of the standard model of inflation include geometrical flatness of the universe to high precision and scale invariance of the fluctuations in the cosmic microwave background. There are also consequences for high-energy particle physics near or at the GUT scale. During the 1980s, there were many attempts to relate the field that generates the vacuum energy to specific fields that were predicted by Grand Unified Theories or to use observations of the universe to constrain those theories. These efforts proved fruitless and the exact nature of the particle or field that generates the vacuum energy density for inflation (the "inflaton") remains a mystery.
The name of the theory was a semi-humorous reference to the economic inflation in the United States in the late 1970s.