Many younger people won’t remember a time when inflation was a big political issue, or a subject that might affect their day to day lives. But recent increases in the cost of living, partly caused by the coronavirus pandemic and the supply chain crisis, have started to have a real impact. Last week, the CBI warned that shoppers would face the biggest price rises in more than 30 years this Christmas – and with the inflation rate expected to hit 5% next year, the Bank of England is under pressure to take urgent measures to do something about it.
In this episode, the Observer’s economics editor, Phillip Inman, explains to Hannah Moore exactly what’s going on, setting out how the situation came about, what the options are for dealing with it, and why it affects people’s daily lives. And he examines the arguments for the Bank of England increasing interest rates – as well as the risk that such a move would be premature if the change is largely the result of the coronavirus crisis.
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