What is inflation? How does it affect you?

National World - LocalTV

The Bank of England has a target to keep inflation at 2%, but the current rate remains double that. Putting up interest rates is the usual response to rising inflation. But what does all this information on inflation mean?

Transcript

00:00 Now, what exactly is the current UK inflation rate and how does it affect you? Let's break

00:06 it down. Inflation is the increase in the price of something over time. The Office for

00:10 National Statistics tracks the prices of hundreds of everyday items each month. This tends to

00:15 calculate the Consumer Prices Index, or CPI. For example, if a block of cheese costs £1,

00:20 but costs £1.05 a year later, that means the annual cheese inflation is 5%. The rate

00:25 of CPI remained at 6.7% in the year to September and changed from August. And whilst food prices

00:32 saw their first monthly fall in two years in September, fuel prices still rose sharply.

00:37 In a bid to slow inflation, the Bank of England has increased interest rates to 5.25%, but

00:43 held rates at its September and November meetings. Increasing food and energy bills have helped

00:48 drive inflation up. The war in Ukraine and the shortage of vegetables in the UK have

00:52 also contributed to rising prices.

00:54 [BLANK_AUDIO]

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