An alarming rise in prices, with few obvious solutions

In the 1970s prices kept rising in a way that destabilised the entire economy.

Since then, increases in living costs in Britain have happened at a much more modest and sustainable pace.

This turnaround has been seen as one of the great successes of modern finances and politics.

Now, suddenly, inflation is back, and heading towards 7%.

Economists are divided on whether it is a temporary or more persisting problem.

But now talk of strikes, both here in Northern Ireland and further afield, is spreading like wildfire in both the private and public sectors.

Pay rises of 3% are being rejected as inadequate. It is little surprise that workers are concerned that their pay packets may not be sufficient in this time of soaring prices.

One alarming aspect of this current monetary headache is that one of the traditional levers of control of inflation is rendered almost redundant at this time — rising interest rates.

Only weeks ago a gradual such increase was expected, indeed assumed, to be happening over the coming months. But such a move would be so unpalatable as to be almost impossible in the context of burdened families grappling with devastating fuel bills.

No-one wants lectures on pay restraint from Andrew Bailey, governor of the Bank of England, given that he earns £500,000 a year. But it is not unreasonable to be concerned that across-the-board high pay rises could lead to a 1970s-style spiral. High inflation, among other things, will decimate cash savings.

There are urgent measures that can be done to help families such as scrapping VAT on energy bills (although this would not be possible in NI due to the protocol) and encouraging those who can work from home to do so, to save on their fuel expense. But these are, frankly, modest solutions.