Inference vs. Prediction

A lot of people seem to confuse the two terms in the context of machine learning. This post will try to clarify what we mean by the two, where each one is useful, and how they are applied. I personally understood it when I had a class called Intelligent Data and Probabilistic Inference (by Duncan Gillies) in my Master's degree at Imperial College London some years back. Here, I will present a couple of examples in order to intuitively understand the difference. You observe the grass in your backyard. You infer it has rained.