What is driving inflation?

The topic of inflation has received a significant level of press coverage in recent months owing to the rapid increase in the annual inflation rate of the Consumer Price Index (CPI). To recap, inflation in this sense is the rate of increase in the level of prices for goods and services, which affects the purchasing value of money. In order to maintain price stability, the Government set the Bank of England Monetary Policy Committee (MPC) an annual CPI inflation target rate of 2% with a requirement for the Governor to write to the Chancellor should the prevailing rate deviate by more than ...