Double-digit inflation is an increasingly UK-specific phenomenon
City comment: Bad things happen when bread prices soar
Over the year to March the price of a loaf in the UK went up by 18.9% (John Super/PA)
/ PA Archiveistorically, bad things happen when bread prices soar.
Over the year to March the price of a loaf in the UK went up by 18.9%, according to the latest data from the ONS. While nobody is expecting bread riots on Britain’s High Streets the social impact of food inflation running at almost 20% simply cannot be ignored.
Alarmingly, double-digit inflation is increasingly a UK-specific phenomenon. Britain is now seriously out of kilter with the rest of the developed world — excepting Turkey and Argentina — on the inflation front with a rate twice that of the USA.
Even so it still seems likely that the sheer numerical reality of year-on-year comparisons will allow the Prime Minister to trumpet his “halving inflation” pledge as a “job done” by the end of the year.
But will that be an achievement worth celebrating?
The reining in of rocketing inflation is all so achingly slow and by then so much damage will have been done to the economy.
The harsh reality is that more and stronger interest rate medicine will have to be swallowed over the coming months with all grim implications that has for growth. Meanwhile the UK will fall ever further behind its competitors while it waits for the Bank to tame inflation.
The Government seem to be out of new ideas to get Britain out of the stagflation rut other than “hang on in there” and wait for the CPI, finally, to start its long march back towards the barely remembered 2% target.