“While the inflation rate is still low, a sharp rise in one month is concerning and is unlikely to be a one off. As the economy opens up we will see a classic case of too much money chasing too few goods.
“There has been rampant money printing at home and abroad. That money has been sitting in people’s bank accounts and can now finally be spent. Supply has been restricted by furlough, social distancing and other Covid policies.
“We have all the ingredients for a bout of inflation. The only question is whether it will be short and sharp or if it will become a chronic problem leading to higher interest rates and a downward spiral.”
Notes to editors
Contact: Emily Carver, Head of Media, 07715942731
IEA spokespeople are available for further comment.
For further IEA reading on the threat of inflation, click here.