Consumer price inflation is the speed at which the prices of goods and services
bought by households rise or fall. Consumer price inflation is estimated by using
price indices. One way to understand a price index is to think of a very large
shopping basket containing all the goods and services bought by households. The
price index estimates changes to the total cost of this basket.
A price index can be used to measure inflation in a number of ways. The most
common is to look at how the index has changed over a year. This is calculated by
comparing the price index for the latest month with the same month a year ago.
This is known as the 12-month inflation rate. This bulletin measures inflation to
June 2014, so the 12-month rate measures changes in prices between June 2013
and June 2014