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Digital Subscriptions > Prospect Magazine > Mar-18 > Beating the inflation blues

Beating the inflation blues

The time may have come to get comfortable with risk

The last time the inflation rate in the UK touched its current level was during the early months of 2012—and then it was on its way down. In the intervening years, we became much more accustomed to seeing price rises slow to a crawl than gallop ahead, to the extent that inflation even fell to zero throughout much of 2015. For a few brief months, Britain experienced something hitherto almost unimaginable: prices that neither rose nor fell, but which stood still.

It is no coincidence that, after adjusting for changes in the cost of living, 2015 also saw real wages grow at their fastest rate since well before the financial crisis of 2008: not because pay rises became more generous, but because price rises temporarily vanished. Not for long. In the months before the European Union referendum, inflation started to creep back in and as the result of the vote became clear through the small hours of Friday 24th June 2016, the pound immediately shed around 20 per cent of its value against our major trading currencies. At a stroke, everything we needed to buy from overseas—food, manufactured goods, raw materials, oil—became much more expensive. Since then, inflation has not only risen from the dead. Fuelled by Britain’s gargantuan appetite for imports, it has taken up sprinting.

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About Prospect Magazine

In Prospect’s March issue: A series of writers turn their thoughts to the developing war over words in the UK and the US. Lionel Shriver, Afua Hirsch, Simon Lancaster, Hugh Tomlinson, Tom Clark and two students ask if free expression is truly compromised? What’s really going on in our universities? And what do voters think? Elsewhere in the issue: Michael Ignatieff questions why today’s left-wing leaders can’t live up to the high mark set by FDR, Sameer Rahim shows how western powers have been trying to dictate what Islam should be, and Mary Beard asks “How do we look?” as our perceptions of what is beautiful have changes over the centuries.