Inflation is rearing its nasty head again after a decade of very low inflation, and it is reported to be overtaking housing as the number one concern in the polls.
So what can be done about it?
Inflation in this case is mainly coming from the huge rise in energy prices - caused by deliberate reductions in production of oil and gas, followed by the Ukraine war. This is imported inflation and there is little, long term, that can be done as it is totally out of the control of our Gov. The most that can be done is minor mitigation as any sharing the burden by reducing taxation can only go so far as the revenue has to be replaced or borrowed, and again that can only go so far as shifting the revenue will also be inflationary.
Now, inflation of the 10% and above will cause recession, which will not combat the inflation - only make it worse. Recession will cause unemployment, which will increase spending on social welfare, and those on welfare will no longer be paying employment taxes.
What follows then is prices chasing inflation, and, worse, prices anticipating inflation.
Customer - 'Why is the price going up?' Seller - 'It is because of inflation!'
No, inflation is the price going up - it is not a cause. Inward prices could be a cause, but does the margin need to be maintained? The way to tackle it is to keep people in employment, narrow margins, and seek lower cost alternative supplies - like local producers, or lower cost alternatives, or just do without.
I do not have the answers (obviously), but we do need answers. Previous economic problems have been solved by emigration, but we now have significant immigration so that safety valve is not there anymore.
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