{"id":16208,"date":"2023-05-31T10:33:22","date_gmt":"2023-05-31T14:33:22","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/sunaks-latest-inflation-plan-to-take-britain-back-to-the-1970s\/"},"modified":"2023-05-31T10:33:23","modified_gmt":"2023-05-31T14:33:23","slug":"sunaks-latest-inflation-plan-to-take-britain-back-to-the-1970s","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=16208","title":{"rendered":"Sunak\u2019s Latest Inflation Plan To Take Britain Back To The 1970s"},"content":{"rendered":"
\n

Just when we thought Britain\u2019s economic policy couldn\u2019t get more bizarre, up pops an announcement from Rishi Sunak, the United Kingdom\u2019s Prime Minister.<\/p>\n

Earlier in May, news broke that Sunak would pressure supermarkets to offer basic food staples such as milk, bread and butter at the lowest possible prices, according to multiple reports.<\/p>\n

The phrase used by Britain\u2019s media is \u201cprice caps\u201d and everyone in the UK should be concerned as it represents a return to failed 1970s economic policies.<\/p>\n

A Response to Stubborn Inflation<\/h2>\n

Sunak\u2019s effort is the latest attempt by the government to fight the country\u2019s stubborn inflationary surge. Inflation has come down but key items keep rising at a frustrating rate and have led to mass industrial action by some of the country\u2019s many unions.<\/p>\n

Inflation hit a recent low of 8.7% last month down from 11.1% in October, according to data collated by TradingEconomics.<\/p>\n

<\/fbs-ad><\/p>\n

However, food inflation registered at an eye-watering 19.3% in April down from 19.6% in March.<\/p>\n

Clearly such levels of inflation will hurt lower-income households disproportionately hard. And that\u2019s something no government wants. And, in that respect, the government\u2019s sentiment is worthy.<\/p>\n

Dark Price Control History<\/h2>\n

However, there are better ways to tackle inflation than caps on prices. The route that the Sunak government is pointing to will, in all probability, be a disaster based on the UK\u2019s history of using almost identical policies under the name of \u201cprice controls.\u201d<\/p>\n

Economic theory and history show that price caps tend to lead to shortages, meaning that at government-mandated prices don\u2019t solve the financial problem. They simply move it to somewhere else. Typically, that would mean black market trading in essential goods and the well-connected getting first dibs on critical items.<\/p>\n

During much of the 30 years after WWII, Britain\u2019s politicians left-leaning and right-leaning alike, experimented with price controls. However, they did little if anything to subdue inflation, according to a 1976-dated report from the Canadian-based Fraser Institute.<\/p>\n

In fact, in the three decades after the war, inflation was typically higher than during the periods of no controls, the Fraser research shows. In other words, the price controls worked backward, pushing inflation higher rather than crushing it.<\/p>\n

The goal of calming inflation, which Sunak wants from \u201cprice caps,\u201d likely won\u2019t materialize. What\u2019s needed is something different.<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Just when we thought Britain\u2019s economic policy couldn\u2019t get more bizarre, up pops an announcement from Rishi Sunak, the United Kingdom\u2019s Prime Minister. Earlier in May, news broke that Sunak would pressure supermarkets to offer basic food staples such as milk, bread and butter at the lowest possible prices, according to multiple reports. The phrase […]<\/p>\n","protected":false},"author":1,"featured_media":16209,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-16208","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","tag-featured"],"yoast_head":"\nSunak\u2019s Latest Inflation Plan To Take Britain Back To The 1970s | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Just when we thought Britain\u2019s economic policy couldn\u2019t get more bizarre, up pops an announcement from Rishi Sunak, the United Kingdom\u2019s Prime Minister.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=16208\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta 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