Inflation is currently at its highest level in 40 years, with the Office for National Statistics (ONS) announcing that it currently stands at 9.4%. The increase in the cost of living is hitting people's wage packets as incomes fail to keep up.
The rate of inflation is a percentage used to show the increase in the price of things over time. This is tracked by the ONS, which releases a monthly inflation figure to show how much prices have risen since the same date the year before. This is also known as the Consumer Price Index (CPI).
The CPI inflation rate is expected to reach a high of 11% later this year, exceeding the 40-year record of 9.1% set in May.
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Who measures the inflation rate?
In the UK, the ONS tracks the prices of hundreds of everyday items known as the "bascket of goods". It is updated annually to reflect the average household buying habits.
Thanks to the coronavirus pandemic, the list has been expanded to include antibacterial surface wipes but the likes of doughnuts and men's suits were removed as the move to home working meant that the usage of these items fell.
The basket includes everyday staples such as pasta, mince, apples, carrots, dog food and wild bird seed. It also includes items that reflect a broader change in buying habits, such as meat-free sausages and canned beans as plant-based, vegan and vegetarian diets continue to rise.
This basket forms part of the CPI, which compares today's value of goods with last year's. The aim of the CPI is to track changes in the cost of living over time and work out how far people's money stretches and how fast prices are rising.
Why is the rate of inflation so high at the moment?
There is more than one reason why the rate of inflation is currently so high. It started to rise in 2021, in large part due to increased spending on goods during the Covid crisis.
As economies around the world, including in the UK, opened up after Covid restrictions eased, some businesses struggled to meet this extra demand because of difficulties in getting the materials used in their production.
Russia’s invasion of Ukraine led to sharp increases in the price of energy, which many people have already felt. The war in Ukraine has also caused an increase in the price of many agricultural commodities, such as grain, which are needed to produce food.
When will inflation reduce?
Things will get worse before they get better, but they will improve eventually. The Bank of England predicted that inflation will reach 11% in the autumn. But they insist that the "current high rates of inflation are not likely to last".
The Bank predicts that things will slow down next year, with the rate back at 2% within two years. However, not all economists are sure.
Prof Riccardo Crescenzi, an economist at the London School of Economics, told BBC News: "Inflation is likely to remain a problem in 2023 because its root causes are unlikely to change in the near future."
What can be done to tackle high inflation?
The Bank of England has raised interest rates, which encourages people to save instead of spend, thus reducing demand and lowering inflation. So far, it hasn't reversed inflation but central banks argue that it is preventing further and faster increases.
The Government has also announced a number of support measures for households to help with the cost of living. This has included the likes of the council tax rebate and energy rebate announced by former chancellor Rishi Sunak.
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