What is inflation?published at 06:20 British Summer Time
The Bank of England says high inflation has been caused by a series of shocks to the economy
Each month we report on the inflation rate because it is one several important pieces of data that tell us how the UK economy is performing.
Inflation is a measure of how quickly prices are rising for goods and services. A good example of this is if a bottle of milk costs £1 but is £1.05 a year later, then annual milk inflation is 5%.
The Bank of England says a series of shocks to the economy has contributed to high inflation figures in recent years.
First, the Covid pandemic pushed prices up as more people bought goods – but there were problems getting enough of the goods, particularly those imported from abroad.
Second, the war in Ukraine led to large increases in the price of gas and food.
Then, a big fall in the number of people available to work meant employers began offering higher wages to job applicants, with many businesses increasing their prices to cover these costs.
It is important to understand that even if the inflation rate falls, it does not mean prices are falling – it just means the pace at which they are rising has slowed.
You can read more on how inflation is calculated here.