"Inflation tax" means that:

The term "inflation tax" refers to the phenomenon where the real value of money held by the public decreases as the price level rises. This concept highlights how inflation effectively acts like a tax on money holdings because when prices increase, the purchasing power of currency declines.

For example, if you hold $100 and inflation causes the price level to double, the real value of your money is reduced to what would have been $50 prior to inflation. In this way, consumers and holders of cash are effectively losing wealth through inflation, similar to a tax that erodes their wealth.

The other concepts presented in the options touch on other aspects of taxation or inflation but do not accurately capture what inflation tax specifically denotes. The phenomenon explained in the correct answer elucidates the core idea of how inflation diminishes the value of money, imposing a sort of hidden tax on individuals.