In 2022 UK inflation is expected to hit 5% and may take years to fall back down to the Bank of England target of 2%. The recovery from the COVID-19 Pandemic is driving inflation, as companies are struggling to rebuild capacity, are facing increased input prices, shipping costs and are experiencing labour shortages. These higher costs are then passed on to the end consumer. High inflation is harmful to households, it reduces real income and purchasing power.
Key learning objectives:
Understand what is causing the rise in inflation
Discuss the impact of rising inflation