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The rise and fall of inflation

Is high inflation in the UK dead or dormant? Kit McMahon, formerly chairman of Midland Bank, takes an historical look at rising prices and considers whether inflationary fears are now dampening growth

By Kit Mcmahon   February 1996

In April 1992, when the annual rate of inflation in the UK dipped below 4 per cent, it was only the second time it had done so in 24 years. During those years the pound had lost seven-eighths of its purchasing power. At its height, during the 1970s, annual inflation had been in double figures for six out of seven consecutive years. Moreover, the only previous year that inflation fell below 4 per cent (in 1986) appeared to have been a fluke: price rises soon started accelerating again, briefly reaching 10 per cent during 1990 before dropping back.

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