Inflation, in its simplest terms, is a measure of how much more expensive goods and services are to buy.

The government measures inflation using its Consumer Price Index (CPI) – an analysis of the cost of a series of everyday items including food, fuel, and holidays. The CPI rate of inflation does not include house prices.

The Bank of England raises and lowers the base rate of borrowing in the UK in an attempt to keep CPI inflation as close to the government's target (currently two per cent) as possible.

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