Because the value of Steem fluctuates, it's impossible to predict how much "inflation" there really is - but SP has value above and beyond the Steem that you get back over a 2-year period if you decide to cash it out. It also makes all of your actions on steemit weighted that much more heavily, so you earn larger payouts over time as you contribute.
Those who "cash out" lose influence and future earnings on the platform, in more ways than one.