What is inflation and what is the current rate?

It's a non-ministerial department which reports directly to Parliament.

The ONS collects around 180,000 prices of about 700 goods and services used across the country.

These prices are updated every month with officials visiting the same retailers each time to ensure consistency.

The prices are then weighted with more prominence being given to products people buy more often, such as fuel rather than postage stamps, for example.

There are numerous different measures of inflation that all track slightly different baskets of goods.

The main measure is known as the Consumer Prices Index (CPI), and state benefits and the state pension also rise in line with it.

There is also a Consumer Prices Index including housing costs (CPIH) measure, as well as a Retail Prices Index (RPI) measure, which is used to calculate annual rail increases and student loan interest rates among other things.

How does inflation impact prices?

Inflation doesn't impact prices, rather it's a measure of how prices have changed over the past year.

When it goes up, it means prices on everyday items, essentials, fuel and bills are higher.

If inflation is high enough and is outstripping wage increases, it can see households' real term incomes fall meaning they lose money.

The latest publication looked at how prices had risen over the previous 12 months.

What is the UK's current inflation rate?

The CPI measure of inflation in March was 3.2%, according to the latest figures.

This is down from 3.4% in February and marks the lowest level since September 2021.

Inflation is now closer towards the Bank of England’s 2% target.

It fells on the back of easing food prices which was a main contributor to bringing inflation down.

The dip was partly driven by a fall in meat prices and lower rises for bread and cereals, the ONS said.

Food inflation is now at its lowest level since November 2021.

Inflation was at 3.4% in February – down from 4% in January

What does inflation mean for prices and the economy?

Inflation matters because it affects the value of wages, savings and more. The Bank of England has a target inflation rate of 2%.

This target is set by the government, which believes a small amount of inflation at a stable level is good for the economy.

That's because it boosts economic output by encouraging spending, which in turn means businesses can afford to generate employment opportunities.

It can also make goods more attractive to foreign buyers as it makes their currency worth more, comparatively, to other countries.

However, if inflation is too high or goes up and down a lot, it can be hard for businesses to set the right prices and for people to plan their spending.

It can also mean the cost of essential goods and services can suddenly outstrip the buying power of people's wages.

At the other end of the scale, it's also a problem if inflation is too low or negative, as people may put off spending because they expect prices to fall further.

What is deflation?

Deflation - or negative inflation - is when the rate of inflation falls below zero.

This can happen when the supply of goods is higher than the overall level of demand. It can also be triggered by lower production costs, or a shortage of money in circulation.

The UK was last in deflation territory in 2015, but some experts previously speculated we could see negative inflation due to earlier coronavirus pressures on the economy.

This would mean lower prices for consumers, which on the surface is a good thing.

But the Bank of England points out that when prices fall, people often don't make purchases as they hope costs will fall further.

When people stop buying, less money is going into businesses and the economy, which can lead to recession, wage cuts and job losses.

How can I protect my finances against high prices?

The best way to protect your money from inflation to check your finances regularly and see where you can cut costs.

Find a high-interest savings account if possible to try and make sure your money is growing in line with inflation.

Inflation can eat away at your savings, as your money won't stretch as far when prices rise.

It's important to check you're getting the best interest rate you can on savings, and beating inflation if possible.

Having an emergency savings pot is helpful in times of inflation, to help cover any outgoings that might have increased unexpectedly.

You might consider asking for a pay rise at work, but there are no guarantees your company is in a position to offer one.

Be sure to claim any financial support you're entitled to as well - a benefits calculator can help you work out what you might qualify for.

Be sure to make savings where you can - shop around for better deals on your car and home insurance, as well as broadband and mobile phone.

Make a budget and check your bank statements for any forgotten subscriptions you might be wasting money on.

Some banks are offering you free cash if you switch your current account.

Save money by going to a cheaper supermarket, shopping for own-brand rather than premium products, and looking out for yellow-sticker bargains.

Here's a little-known website where you can get groceries cut down to as little as 9p.