Giving evidence in the historic setting of a wood-panelled room in the UK parliament on Monday, Andrew Bailey, governor of the Bank of England, was facing questions from MPs concerned that the nation was going back to the bad old days of high inflation. “We are a very long way from the 1970s,” Bailey scoffed, highlighting the differences to an era when inflation hit 24.2 per cent in 1975.
The central banker was lucky that none of the parliamentarians had asked whether there were lessons to be learnt from the late 1960s, when the nation first began to lose control of prices in the postwar period, an era that some economists argue is being repeated now.
Two days later, that historical parallel was amplified when the strength of new inflation figures surprised the BoE again. Prices in the UK were 4.2 per cent higher in October than a year earlier, the fastest rate of inflation for a decade, more than double the bank’s target and almost twice its forecast as recently as six months ago.