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What is the UK inflation rate and why is the cost of living rising?

Prices are rising faster than they have done for 40 years.

What is inflation?

Inflation is the increase in the price of something over time.

For example, if a bottle of milk costs £1 and that rises by 5p compared with a year earlier, then milk inflation is 5%.

Every month a figure is released, estimating how much prices are rising overall - it's currently at 9.4%.

Why are prices rising so fast?

Many things are contributing to the high rate of inflation, including:

-Energy bills, which have risen rapidly because of high oil and gas prices. They're expected to increase sharply again from October

-Petrol and diesel prices. Prices recently fell from record levels but are expected to remain high.

-Food prices

- The cost of used cars has also risen and is contributing to inflation, the Office for National Statistics (ONS) says

-The costs of raw materials, household goods, furniture and restaurants and hotels have risen

-Higher interest rates make mortgage payments more expensive for some homeowners

Not all prices behave the same way. So, the cost of some things has grown a little or stayed the same, but for others, it has rocketed upwards.

Who measures the UK's inflation rate?

To come up with an inflation figure, the ONS keeps track of the prices of hundreds of everyday items. This is known as the "basket of goods".

The basket is constantly updated.

Each month's inflation figure shows how much these prices have risen since the same date last year. This is known as the Consumer Prices Index (CPI).

Contact us for more information.

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