Purchasing power is what your money can actually buy. If prices rise 2% a year, the same 100 kroner buys about 2% less each year.
Compounding
Small rates add up: at 2% a year, purchasing power halves in roughly 35 years (own calculation: ln 2 / ln 1.02 ≈ 35). At 5% it halves in about 14 years.
Savers in cash lose purchasing power whenever inflation is above the interest they earn. That is a key reason people look for a sound money like bitcoin, whose supply nobody can increase.