The government is keen to put prices up. It has hiked rail fares by double inflation, and Council tax. They have allowed large double figure percentage rises in water bills. They have pushed up energy prices three times since taking office, now an increase of over 15%.

They have increased the costs of employing people considerably with National Insurance rises in April. Businesses that can will pass those cost rises onto customers.

If the Bank of England does not accommodate these rises with a looser money policy then the public sector rises will leave too little spending power for other items and demand will drop. Businesses will find they cannot pass on all the cost rises and will have to employ fewer people and reduce other costs.