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Every month the Office for National Statistics collects prices of goods and services from a wide range of retailers across the country - including online retailers.
Prices are updated every month and price collectors visit the same retailers each time in order to monitor identical goods and make sure they are comparing like with like.
All these prices are combined using information on average household spending patterns to produce an overall prices index.
It also takes into account how much we spend on different items.
So items are weighted - i.e. given more importance in the inflation indices - according to how much we spend on them.
We typically spend more on fuel than on postage stamps, for example.
So a large rise in the price of petrol and diesel would affect the overall rate of inflation.
