Inflation is a measure of how quickly prices are rising over time. The higher the inflation rate, the more prices are rising by. The inflation rate for a particular month shows how much prices have risen by compared to the same time last year.
In order to calculate the inflation rate, the Office for National Statistics, or ONS, tracks the price of a so-called ‘basket of goods’. There are over 700 items in the ‘basket’ and the items in it are changed from time to time to reflect changes in our shopping habits.
The most commonly used inflation index is called the Consumer Price Index or CPI.