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More glossary terms
- JOLTS (job openings and labor turnover survey)
- Earnings per share (EPS)
- Nasdaq composite
- Unit
- Value investing
Inflation definition
Inflation is the rate at which prices rise over time. When inflation goes up, your money doesn’t stretch as far – £1 today buys you a bit less than it did a year ago.
What is inflation?
Inflation is the rate at which prices rise over time. When inflation goes up, your money doesn’t stretch as far – £1 today buys you a bit less than it did a year ago.
It’s measured using things like the Consumer Price Index (CPI), which tracks the price of a typical basket of goods and services – think food, petrol, energy bills, clothes, and more.
Is inflation bad?
A little bit of inflation is normal and even healthy for the economy. But if it rises too quickly, it can put pressure on households, especially if wages don’t keep up. That’s because if inflation is rising faster than wages, it means that things are getting more expensive plus people will find it harder to pay for them.
In the UK, the Bank of England aims to keep inflation around 2%. If it’s too high or too low, the Bank may step in by adjusting interest rates to help bring things back on track.
Investing glossary
It's important you know
Capital at risk. All investing should be for the longer term. The value of your investments can go up and down, and you may get back less than you invest. Tax treatment depends on individual circumstances and may be subject to change in the future.
A 25% government penalty applies if you withdraw money from a Lifetime ISA for any reason other than buying your first home (up to £450,000) or for retirement, and you may get back less than you paid into your Lifetime ISA.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Payments you make into your pension won’t be accessible until the minimum pension age (currently 55, increasing to age 57 from 2028). Tax treatment depends on individual circumstances and may be subject to change in the future.