Blame Covid: why UK inflation is at its highest for 30 years
Mobile phones were still a rarity. Shopping online was a thing of the future. The launch of football’s Premier League was looming. This was Britain in March 1992, the last time the annual inflation rate was as high as it is today.
Nobody under the age of 30 can really recall when the cost of living was a pressing political issue. There have been the occasional surges, usually caused by a rise in global oil prices, but nothing to match what has happened in the past six months.
Even longer memories are needed for the time inflation hit its postwar peak in August 1975. Then the annual rate climbed above 25%, prompting a run on sterling, double-digit interest and a bailout from the International Monetary Fund a year later.
For many years, it looked as if inflation was something to be read about in history books. In the late 1990s, the economist Roger Bootle opened a book by asking readers to envisage “a world without perpetual inflation”, where prices would rise some years and fall in others, where in a good year pay would rise by between 2% and 3% and interest rates would fluctuate between 2% and 4%.
Bootle’s book – The Death of Inflation – stirred up what he called a “hornet’s nest of criticism” at the time, but by and large what he predicted came true. By the late 1990s the period of high inflation lasting from the early 1970s to the early 1990s was pretty much over.
During that two-decade period, inflation was akin to the impact of an earthquake. There was a big initial shock in 1973-4 followed by a series of aftershocks each less severe than the last. UK inflation peaked at 27% in 1975, just over 20% in the early 1980s and 11% in the early 1990s. It has never subsequently been anywhere close to 10%.
Economists such as Bootle
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