Can inflation be brought under control?

That today’s inflation figures would come as an immense shock to anyone who has returned from a year in the wilderness goes without saying. A little over a year ago, in May 2021, the Bank of England was predicting that the Consumer Prices Index (CPI) would peak at no higher than its two percent target. CPI is now in double figures for the first time in 40 years, at 10.1 per cent – exceeding even the already-grim expectations of many economists. The Bank of England may yet again have to revise its forecast for the inflationary peak – which just two weeks ago it put at 13 per cent. The Bank’s Monetary Policy Committee has been asleep on the job and it is a wonder that its governor, Andrew Bailey, is still in his job.

Yet just as so many people failed to foresee the spike in inflation, are we now failing to see signs that inflation might soon come to a crashing halt? We have heard endless talk in recent months about an ‘inflationary spiral’, where prices drive up wages which in turn drive up prices etc.