Friday 23rd September 2022

This article’s designed to help you:

  • Understand what inflation's all about, and why it matters.
  • Tell the difference between the various ways inflation is measured.
  • Learn about the effects of inflation on your family's finances.

Inflation's a word you tend to hear a lot when the economy's wheels are wobbling. It's a pretty broad term, but the basics of it are actually fairly simple. Prices tend to go up over time, whether that's because it's costing more to produce things or there's more demand for them than the producers can handle. Either way, the pound in your pocket tends to shrink in real-world value year by year. When the rate of inflation's low, you won't tend to notice it so much. When it hits double-digits, though, as it did in July 2022, you can start seeing a sharp rise in the everyday prices you're dealing with. Here's a quick guide to inflation to help you understand why it matters to UK households.