When restaurants reopened across England at the start of July, I was surprised by the rise in price of a basic burger and chips at the pub around the corner from my home. Anecdote is not evidence, I persuaded myself. My reasoning was that this must be an exception, because cautious consumers and a desperate hospitality industry would generally force prices back towards pre-crisis levels.
July’s sharp rise in UK inflation should give us pause for thought. No one should see it as the precursor to runaway prices, and we should remember that data blips happen all the time. But there is enough in the figures, at least, to highlight the limits to economic stimulus as a response to the coronavirus crisis.
Consumer price inflation rose from 0.6 per cent in June to 1 per cent in July with household goods, clothing, and petrol prices accounting for most of the increase. On their own, there is nothing to worry about in these price moves. Core inflation is similar to that in the eurozone and the overall level is still 1 percentage point below the Bank of England’s 2 per cent target.