is this the signs of dementia? My mom has imaginary conversations with people.?

my mom will go shopping & buy items & a month later can t remember buying items .she bought. or she will give cloths away to goodwill & a month later not remember doing that. she will tell stories about places she has never been. she can t remember the way events in her life, the way things really happened.. she makes up all kinds of weird stories. she is in her 80 s her short term memory seems fine.. she will go for a walk & when she comes back, she claim to have conversations with neighbors & when I talk to neighbors they said they didn't say the things she claims they said.