Inflation going to worsen

In case we thought it was going to get better, the Bank of England is now saying inflation is going to get worse. As if we couldn’t have guessed, thanks guys. …

By
14th May 2008 at 4:02 pm

In case we thought it was going to get better, the Bank of England is now saying inflation is going to get worse. As if we couldn’t have guessed, thanks guys. And yet I don’t think things are as bad as all that.

I know that must seem crazy in the light of the current headlines but I don’t regard myself as particularly elderly (43, thanks for asking) and yet everyone is still running around claiming inflation over 2 per cent is some sort of disaster.

OK, let’s not get party political here but 1980 – yes, just after the last unbroken period of Labour administration and with a Prime Minister who took over after the elected bloke resigned – inflation’s peak was 20 per cent. The same link confirms that interest rates peaked at 17 per cent at the time, and they hit almost the same height, albeit only overnight, in 1993.

Younger readers (he patronized) will be now be staring at their screens in disbelief but these are facts. I’m not saying we’ve never had it so good, nor am I claiming it can’t happen again. Nevertheless, if everyone wouldn’t mind calming down a bit and remembering what’s actually happened in the past, they’d realise this isn’t anywhere near the disaster that’s being portrayed by certain members of my own illustrious profession. Inflation itself can actually be a good thing as long as people have the money to cope with it as it aids expansion – disinflation, in which prices go down, is the opposite and it’s when jobs start to get lost.

No, the real problem, as I’ve said before in this column and as the Bank of England hints in the BBC report quoted, is confidence. The Banks have been seen to wobble and that mustn’t be allowed. But inflation at panic levels? Don’t make me laugh.

Guy Clapperton

Guy Clapperton is a freelance journalist who specialises in small business issues and has written for the likes of The Guardian, the FT and the Daily Mirror. Guy has written about finance and franchising for SmallBizPod. http://www.guyclapperton.co.uk

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