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These 7 charts will help you understand today’s inflation stats

Inflation has hit its highest rate in 41 years. But what do all the statistics actually mean? We’ve broken it down with 7 simple charts

Inflation has reached its highest level since 1981 ahead of Jeremy Hunt’s Autumn Statement. Prices rose by 11.1 per cent in the year to October 2022.

The conversation around this news often takes place in fairly abstract terms. Yes, inflation is a measure of how fast prices are rising.

But what does inflation mean? There’s more to the picture than a single percentage figure, and prices don’t all rise by the same amount.

We’ve put together seven useful, simple charts to help you get your head around it all.

1. Inflation is increasing rapidly

The Bank of England has said inflation will remain high in the “near term”, but will fall from the middle of next year. However, this isn’t necessarily the good news it seems.

It’s because inflation is calculated by seeing how much prices have increased in the past year. By mid-2023, this will mean including this year’s increased energy prices in the comparison.

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2. Falling inflation doesn’t mean falling prices

It’s tempting to see inflation falling on a graph and think it means prices are going down. But often it’s just that prices are rising less quickly.

For example, from July to August 2022 inflation fell by 0.2 per cent. But prices still rose.

Prices can also go down month-on-month while inflation remains positive. Inflation is usually measured by comparing prices to the same month in the previous year, rather than the previous month.

For example, prices fell from December 2021 to January 2022, but inflation actually went up 0.1 between the two months.

As a rule of thumb, any time inflation is above 0, prices are higher than they were a year ago. 

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3. Rent increases

Today’s inflation figures are being attributed to rising energy and food costs, but rents are also rising.

4. The poorest are facing higher price rises

Rising prices aren’t spread evenly among the population – those in the lowest income brackets have seen prices rise more than those in the richest brackets.

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5. Council tenants are facing higher inflation

Price rises also vary depending on whether you own or rent your home. Subsidised renters – those renting from a social landlord, a council, or who live rent free – saw the highest rate of inflation.

Private renters actually faced lower overall price increases than those who own and live in their own homes, also known as owner-occupiers.

6. Food prices have risen faster than inflation in some cases

It’s impossible not to notice while doing a weekly shop: everyday items are noticeably more expensive. And today’s statistics illustrate just how sharp those rises have been.

Let’s imagine you’ve done a slightly weird shopping trip: a loaf of bread, a pint of milk, 250g of butter, a 250g box of teabags, a kilogram of cheddar, a cucumber and a kilogram of bananas. Then, while you decide what exactly to make with all that, you washed it down with a pint of draught lager at the pub

In October 2021 that’d cost you £16.74

In October 2022 it’d cost £20.11

So while the headline rate of inflation is 11.1 per cent, this basket of shopping has increased by 20.1 per cent.

7. Energy prices have also shot up

For anyone who has received an energy bill recently, this won’t be a surprise. But it’s a key driver of inflation, and it’s useful to see that increases have been sustained over many years, with the latest increases particularly severe.

Big Issue Group’s #BigFutures is calling for investment in decent and affordable housing, ending the low wage economy, and millions of green jobs. The last 10 years of austerity and cuts to public services have failed to deliver better living standards for people in this country. Sign the open letter and demand a better future. 

Read more of the Big Issue’s coverage of inflation and the Autumn Statement:

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