Our calculator shows you what CPI inflation means for your finances and how much less your money can buy compared to last year.
Workers in the UK faced a record real wage cut in the three months to June, with wages falling by 4.1% after adjusting for inflation.
This was followed by an unprecedented surge in the consumer price index (CPI), a measure of inflation, with prices for goods and services rising an average of 9.4% year-on-year in June.
But how much less is your money worth because of inflation?
We’ve created a salary calculator to show you how far the value of your salary has fallen this year given the rising cost of living.
By how much has inflation gone up?
In the first six months of the year alone – between December 2021 and June 2022 – prices rose by 5.8%, according to ONS CPI data.
That means you would now have to spend an average of £1.06 to buy what would have cost you just £1 at December 2021 prices – although not all goods and services are rising at the same rate and some prices may have fallen.
Put another way, this means that from December 2021, £1 would just be enough to buy you 94p worth of goods and services at June prices.
How much less is your money worth?
We’ve created a salary calculator below to help you understand what inflation means for your finances.
If you enter your monthly income in December 2021, the calculator will show you how far that money would have gone in June after inflation.
For example, if you earned £1,500 in December, you would only buy £1,417.49 worth of goods and services in June.
Social security contributions also increased in April, which is not reflected in the calculator.
What is being done about inflation?
Inflation is driven in large part by rising fuel, energy and food prices.
The ONS said motor fuel costs rose 42.3% in the 12 months to June, the biggest jump on record.
Chancellor Nadhim Zahawi and Bank of England Governor Andrew Bailey have both pledged to bring inflation under control.
But the Bank of England expects inflation to rise even further in the autumn when Ofcom’s next energy price cap review is expected to push annual bills to almost £3,000.
The current cap of £1,971 is already a record, beating the previous high by 54%. It is expected to rise to £2,980 in the next period, which runs from October to December.