Currently the inflation caused by the collation system is 5% per year. Originally 5% inflation were proposed as the absolute maximum for all systems that cause inflation. Furthermore, the high inflation negatively affects the price, while overpaying collators (at the current price of $0.09 about 300$ / month) and delegators (20% APR).
This proposal aims to reduce the total inflation caused by the collation system to 1.5% per year, effectively reducing the excepted monthly revenue per collator to $85 (at a ZTG price of $0.09) and the average delegator APR to 6%. Collators should easily stay profitable with this revenue, especially when considering that the hardware requirements for the Zeitgeist parachain node are very low when an external relaychain node is used. 6% delegator rewards are also reasonable considering staking APR other parachains offer.
Some of the gained inflation potential will be utilized for the Court system, which is activated on mainnet in approximately one week.
More information in regards to the rationale and calculation of the inflation parameters can be found at Collator System Inflation Document