Sam Alvis @samalvis.bsky.social · May 7 3/ If prices go beyond £2000 that means inflation is taking off. The fundamental reason to cap prices is to prevent expectations of high inflation setting in and avoid the blunt tool of interest rate rises Although consumers are protected until July, govt needs to commit now to manage expectations.
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4/ Inflation and interest rate rises are the most damaging thing to govt's fiscal position. We find in the current stalement inflation reaches near 6% costing govt £8bn a year in debt interest and lost tax revenue. This is significantly more costly than intervening. But 2 caveats...