Daily Junction.mobi portalInflation is the rate at which prices rise, measured by the Consumer Price Index (CPI) tracking a basket of 700+ goods and services. UK inflation hit 11.1% in October 2022 (highest since 1981), driven by energy prices, food costs, and post-pandemic supply chain disruption. The Bank of England targets 2% inflation and raises interest rates to cool the economy when inflation is too high, making borrowing more expensive. High inflation erodes purchasing power — £100 in 2020 was worth only £83 in 2023 due to 20%+ cumulative inflation over three years. Inflation has now fallen to 2.3% (June 2024) after the Bank raised interest rates from 0.1% to 5.25%, but the cost of living crisis continues. Prices will not fall back to 2019 levels — they will stay high, rising more slowly. The Bank of England's job is to keep inflation at 2%, balancing the risk of high inflation (eroding savings, reducing purchasing power) against the risk of recession (caused by raising rates too fast). Inflation is a fact of life, but when it spikes to 11%, it causes real pain for millions of households. The 2022 inflation crisis was a reminder that stable prices are not guaranteed, and that central banks must act decisively to keep inflation under control.