What is it? | An employer's guide to inflation

‘Inflation’ is a word you would be hard pressed to escape today.

Everywhere you turn are stories of regular people struggling due to the increased cost of things and stories about how weak the British Pound is compared to the US Dollar. For many, the knock-on impact of inflation is being experienced in their own lives with their monthly salary not going as far as it once did. But what does inflation even mean?

Essentially, inflation is how much goods and services have increased within a year. The Office for National Statistics (ONS) looks at the price of goods and services in the UK – such as milk, bread or holidays – which determines the Consumer Price Index (CPI) for that year. This price is compared to the previous year to find the rate of inflation at that point in time.

Now, the figures suggest that the rate of inflation has slowed to 6.8% – this is down from 7.9% in the year to June.