While inflation figures usually generate a news story in their own right, last month’s figures led to the biggest news line of them all.
If one phrase sums up how Britain suffered in the years after the Covid pandemic, it is “cost of living crisis”. Food prices peaked later than general inflation. In June of last year, the ingredients which make up a spag bol hit at £10.35 before falling back to £10.15 last month.Interest rates were high in the 1980s when the price of property was low. Rates fell in the 00s as home prices soared. Then came the 2008 financial crash and the cost of borrowing tumbled to almost zero. Rising inflation during 2021 triggered a round of interest rate increases to 5.25%.
Lower interest rates will give the economy a much-needed lift, but it’s not a done deal. There are risks from the global economy and from domestic price pressures. A widening of the Middle East conflict could send oil prices higher, while defeat for Ukraine could spark a return to higher food and energy bills.
There was a huge contraction in the Covid-affected spring of 2020, but the economic shutdown was on the government’s orders and there were lots of subsidies around to help businesses and households. The government also softened the blow to incomes during the 2009 recession. So it is not since the 1990 contraction that people have been left to survive without much state intervention. Then, tens of thousands lost their homes and many businesses went bust.Recessions are always not far away.
relying on food banks. The Trussell Trust, which is the UK’s largest food bank charity, has seen its business grow rapidly. From the number of food banks to the number of emergency parcels, they provide a sad record of the UK’s growing number of impoverished households.