Just how much of a threat is rising inflation?

Investors are getting spooked by the prospect of rising prices. But how much of a threat is that really? Simon Wilson reports

Mervyn King
Mervyn King: inflation is once again a “serious risk”
(Image credit: © Getty Images)

What’s happened?

The spectre of inflation has risen from the grave and investors are getting spooked. In the UK, the rate of consumer price inflation rose to 2.1% in May, up from 1.5% the previous month and continuing a surge from a low of 0.3% last November. That’s a big rise in just six months. In the US it’s even higher – 5% in May compared with an average between 2010 and 2020 of 1.7%. In the eurozone, it’s 2%, but the Bundesbank predicts that in Germany it will be 4% by later this year; politicians have warned of a “social explosion” as a result.

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Simon Wilson’s first career was in book publishing, as an economics editor at Routledge, and as a publisher of non-fiction at Random House, specialising in popular business and management books. While there, he published Customers.com, a bestselling classic of the early days of e-commerce, and The Money or Your Life: Reuniting Work and Joy, an inspirational book that helped inspire its publisher towards a post-corporate, portfolio life.   

Since 2001, he has been a writer for MoneyWeek, a financial copywriter, and a long-time contributing editor at The Week. Simon also works as an actor and corporate trainer; current and past clients include investment banks, the Bank of England, the UK government, several Magic Circle law firms and all of the Big Four accountancy firms. He has a degree in languages (German and Spanish) and social and political sciences from the University of Cambridge.