Inflation Back to Basics

They keep talking about it, and it appears to be the big scary monster in the nightmares of world economies, along with its twin deflation… It’s inflation and what I would like to know is, what is it? Can we go back to basics for a moment?

Inflation in a nutshell:

– is measured in a number of ways, the main ones being CPI and RPI in the UK. CPI stands for Consumer Prices Index and RPI is the Retail Prices Index.

– affects the value of your money. If inflation goes up, your pound will buy you less. – is checked once a month by the Office for National Statistics (ONS).

– CPI is used for the UK’s monetary policy so therefore affects what the Government and the Bank of England make their targets.

Bit simply put there. But it helps to step back sometimes and make sure we understand some of the basics so that we can get our heads round the bigger economic factors and issues that affect Governments, banks, retailers, money markets, currencies, and the regular man on the street.

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