19/09/2024
Prices in the UK went up by 2.2% in the 12 months to August, the same rate as in the year to July.
The Bank of England has a target to keep inflation at 2%.
What does inflation mean?
Inflation is the increase in the price of something over time. For example, if a bottle of milk costs £1 but is £1.05 a year later, then annual milk inflation is 5%.
Why are prices still rising?
Inflation has fallen significantly since it hit 11.1% in October 2022, which was the highest rate for 40 years. However, that doesn’t mean prices are falling - just that they are rising less quickly.
Inflation soared in 2022 because oil and gas were in greater demand after the Covid pandemic, and energy prices surged again when Russia invaded Ukraine. It then remained above the Bank of England’s 2% target partly because of high food prices.
Although these have now dropped back, some parts of the economy, like the services sector - which includes everything from restaurants to hairdressers - are still seeing more significant price rises.
Read the full BBC article here: https://www.bbc.co.uk/news/business-12196322