, September 25, 2021

UK inflation spikes ... just like it did after World War 2


  •   3 min reads
UK inflation spikes ... just like it did after World War 2

UK inflation saw a sharp rise in April, but before you see this as evidence that the beast called inflation is back and will create havoc, consider the story of inflation after World War 2.

UK inflation rose to 1.5 per cent in April, from 0.7 per cent the month before. Month on month, prices increased by 0.6 per cent.

They say that once inflation gets hold, reversing it is akin to squeezing toothpaste back into its tube.

Why does it matter? Well,  inflation often begets more inflation. If prices go up, workers demand higher pay rises, so employers have to increase prices. As a result, workers demand even higher pay rises, and we get into a vicious upwards spiral.

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