Inflation is on the march. After the easing of lockdown in May, Britain has raced from economic bust to boom, with the rate of consumer price inflation hitting 2.1% – above expectations and breaching the Bank of England’s 2% target rate.
Driven by the rising cost of petrol, clothing and recreation in the month indoor hospitality reopened, the latest snapshot will fuel concern that the cost of living is spiralling out of control. But it must also be taken with a pinch of salt.
Inflation is measured using a basket of goods and services and taking the 12-month price change. Behind the headline rate are price movements heavily influenced by May 2020, when Covid-19 crippled the world economy.
Motor fuels were the biggest driver of the latest inflationary burst, rising by an eye-watering 17.9%. But wild price swings were to be expected. The Office for National Statistics notes average petrol prices stood at 127.2p a litre in May,…