Inflation rising again is the last thing this fragile government needs

The unusual nature of the current inflation means an unusually painfully monetary and fiscal squeeze, writes Sean O’Grady

Liz Truss’s fixation on growth missed the point (AP)

As has been well-noted, the “headline” rate of inflation, at 10.1 per cent, is worrying and will push many who the Conservatives used to call the “just about managing” into poverty.

Yet it only tells part of the pernicious story. Food prices are up 14.6 per cent. The inflation in energy bills is more dramatic still and even more apparent to households and businesses (who also face spiralling costs with less assistance from the state). Rents are rising. Mortgage bills are up. Fuel costs are still high. Food banks cannot cope with the demands on them. Cash savings are being shredded in their purchasing power. There is no place to hide. It is going to get worse – 20 per cent annual inflation is perfectly plausible in the coming months.

Yet, even with the coverage it receives and the way it pervades every corner of life, inflation is not given the prominence it deserves, and least of all by ministers. The foundational error of the Truss administration was to place “growth, growth, growth” ahead of anything. It led to a disastrous mini-Budget and panic in the gilt market, but it has also skewed the terms of political debate. The cost of living crisis was certainly acknowledged by Liz Truss as Tory leadership candidate and now as prime minister, but it was regarded as secondary to the growth conundrum, and was in case famed wrongly.