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Stagflation and the Cost of Living Crisis in the UK

Graham Watson

22nd June 2022

Here is a selection of articles on the rapid rise in consumer price inflation in the UK and fears of a return to the stagflation of the 1970s and 1980s.

This is an interesting article. It's fundamentally about the distribution of income - and labour markets - highlighting how the Unite union has been successful in winning its members pay increases by forensic scrutiny of company accounts, and demonstrating that the return to capital, and the managerial class, have outstripped returns to workers.

Treasury Minister, Simon Clarke, has warned firms to be "very careful" in setting wage increases for fear of fuelling a wage-price spiral. Given that he's got responsibility for the pay review body, it's a clear indication that public sector workers are not going to get a pay rise remotely close to the rate of inflation. Expect fun and games later in the year, with the unions getting involved.

Worth noting the position of the Chief Economist at the Bank of England; it seems that there are likely to be further interest rate rises in the pipeline.

Here is a global look at the cost of living crisis, with inflation seemingly high everywhere, as food and energy prices rise, and people looking to innovative solutions to reduce their cost of living. One thing worth noting is that global supply chains are creaking - with egg and noodle shortages in Taiwan of all places.

Kantar reports here the extent to which food price inflation is rising - with food bills set to become £32 per month more expensive in 2022. As a result of the cost of living crisis, consumers are swapping to supermarket own brand goods, and discounters, like Aldi and Lidl, are gaining market share at the expense of other supermarkets

Finally - I love a good visual representation, me: this Guardian piece looks at the cost of living crisis. Very good it is too.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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