It's the rate at which the price grows for each buy.
For example, if a business would cost 1 million and has a 10% inflation rate, the next time you buy it, it will cost 1.1 million. This is calculated per business bought, i.e buying 9 businesses with 10% inflation at 1 mil will up the next time buy price by 9 * (10% * 1 million) = 9 * 100k = 900k. The next time you buy the business, it will cost you 1.9 million a piece. You would, however, lose more if you bought the business 1 at a time, since then, the price calculation would occur more often, resulting in a higher total cost for you. (Buying 9 businesses of the same as above, but 1 at a time, would cost a total of 12.6 million, as opposed to buying all 9 at the same time, which will cost you 9 million.)
The 10% is always of the original price. (The third time you buy the same property, it will cost you 1.2 million, not 1.21 million.
//Formidable - DeathWish MGS