For those around in the late 1970s and early 80s the word ‘inflation’ sparks memories of a constantly rising cost of living in the UK. This was accompanied by an eye-watering bank base rate that saw some property buyers paying an interest rate of 15% on their mortgage. When the ‘inflation’ rate hit a high point of 20% in the late 70s industrial disputes escalated as workers fought to keep their wages in line with ‘inflation’. The wage rises that were granted fuelled ‘inflation’, with rising oil prices further aggravating the situation. Thankfully, such high levels of ‘inflation’ are now a distant memory.
UK ‘inflation’ is currently at 2.3% but indicators are it might continue to increase in the coming months. The UK bank base rate is at a historic low of 0.25%, however, if a ‘deflationary’ influence becomes necessary the Bank of England might have to raise the rate later this year.
What is the definition of ‘inflation’?
ECONOMICS an economic process in which prices increase so that money becomes less valuable
- Your pension is protected against inflation.
- inflation rate/rate of inflation: The inflation rate is 3.2%.
- high/low inflation: countries with persistently high inflation
- inflation rises/falls: Inflation has risen for the fourth month running.
- in line with inflation (=increasing when inflation increases): They had expected a pay rise in line with inflation.