Here's how inflation works and what can be done about rising prices

Everything seems to be getting more expensive. Food, gas and housing prices are on the rise while paycheques are slow to keep pace. The CBC News series Priced Out explains why you're paying more at the register and how Canadians are coping with the high cost of everything.

As the COVID-19 pandemic has dragged on, so has high inflation, both in Canada and in other parts of the world. 

Recent Statistics Canada data shows inflation hovering around five per cent, well above the two per cent target rate that experts think is the sweet spot.  

With the price of everything on the rise, Canadians are increasingly concerned about their bills creeping higher each month, and businesses are gauging where their costs are heading in the months to come.

To help make sense of it all, here's a brief explanation of how inflation works and what can be done to rein in the rising cost of living.  

Inflation is when prices for goods and services rise and purchasing power falls.

When inflation goes up, people and businesses have to spend more money to buy the same amount of goods and services.

Put simply, everything becomes more expensive. 

It's important to note that the term "inflation" is reserved for instances where a rise in prices is a sustained trend rather than a fluctuation. 

"If it's going up month by month, we say we've got inflation," said David Laidler, professor emeritus of economics at Western University. 

Some inflation is always expected in the economy, and the Bank of Canada aims to keep it at around two per cent. When the inflation rate deviates from this target or becomes unpredictable, that's when worry sets in for policymakers. 

To measure the rate of inflation, economists in Canada use the Consumer Price Index (CPI). The CPI looks at a "basket" of goods and services that roughly represents what the average consumer purchases. Statistics Canada updates what this basket contains every two years so the measure continues to reflect how Canadians are spending their money. 

WATCH | How Statistics Canada calculates inflation: 

Economists will compare the cost of this basket last month with the same month a year earlier. The difference between the two is commonly known as the inflation rate.