What is inflation?
Inflation measures how the price of goods and services has changed over time. For example, if inflation is 3% and an item cost £1 last year, it means that item would cost £1.03 now.
When inflation goes down, it does not mean prices have stopped rising – they are still going up, but just more slowly than below. If prices went down, you would be called deflation, and this is when inflation falls below 0%.
The ONS calculates inflation based on a regularly updated “basket of goods” and services that represents what households are buying.
