Economicscalendar_todayLast updated: Apr 2026
What is Inflation?
/ɪnˈfleɪʃən/
The rate at which the general level of prices for goods and services rises, eroding purchasing power over time. Central banks typically target 2% annual inflation as economically healthy.
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Everyday Example
If inflation is 5% and your salary stays the same, you've effectively taken a pay cut. The £50 weekly shop now costs £52.50 — the money in your pocket buys less than it did a year ago.
publicReal-World Application
“The UK experienced 11.1% inflation in October 2022 — a 41-year high — driven by energy prices following Russia's invasion of Ukraine. The Bank of England raised interest rates 14 consecutive times to combat it.”
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Did you know?
The worst recorded hyperinflation occurred in Hungary in 1946: prices doubled every 15 hours. Germany's 1923 hyperinflation is more famous — workers were paid twice daily so they could spend wages before they lost value.
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Key Insight
Inflation is a hidden tax on savers. Money sitting in a low-interest account loses real value every year. This is why investing — putting money to work faster than inflation erodes it — is not optional but necessary for financial health.
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