Bank of England needs to heed its remit of controlling inflation
Concerns about inflation have not been a major feature of political life in the UK for 40 years.
But our reports on page 13 today give a glimpse of the problems that could return if prices continue to rise.
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Hide AdIt is little wonder that workers are worried about below inflation wage increases, given the sharp hike in living costs, such as fuel bills. At the same time, it is not surprising that employers have concerns about pay rises if they are based on what might be temporary price increases.
Will those price increases in fact be temporary? No-one seems to know for sure.
But we are getting a fresh insight into the general instability caused by inflation.
There is anxiety on both sides of the Atlantic.
Last night the minutes of the last policy meeting of the Federal Reserve in America, the body that sets interest rates, were being digested.
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Hide AdMost Fed policymakers are leaning towards increasing interest rates, as inflation in the US hits 5.8%.
In the UK, it is at a 30-year high of 5.5%.
And remember that it is people or businesses who have borrowed heavily, perhaps even irresponsibly, who gain when inflation is high. The real-terms value of their debt pile is cut by price increases.
It is prudent savers who lose out. Their nest egg suffers the opposite fate, becoming ever less valuable.
The Bank of England has control of inflation as one of its core targets.
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Hide AdThis has been allowed to go into abeyance due to the pandemic. Now is the time for control of prices to return to the forefront of the central bank’s thinking.
People are back out in shopping stores and in restaurants and bars and extreme pandemic fiscal measures such as abnormally low interest rates might soon start to become an economic problem, not a solution.
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