It's simple. Inflation is driven by increasing the dollar amount for, well, everything. He is correct in saying that this is what drives inflation: If every single thing is worth 20% more, it's really just that the dollar is worth 17% less.

"Inflation" is shorthand for 'price inflation' - every single price and dollar amount goes up, and, when it happens too fast, can tear an economy apart (e.g. 1942 Berliners packing cash into wheelbarrows to go and buy bread).

EDIT: grammar