Inflation has been dead and buried for such a long time that, collectively, we may have forgotten why it’s such a big problem. There are three primary reasons why, now that it’s back, we should worry. First, it is a deeply unfair process. Second, it creates uncertainties about what things really cost, clouding our ability to know what’s really going on. Third, our leaders — the politicians and the central bankers typically tasked with controlling inflation — don’t always see eye to eye on how inflation should be brought to heel.
Inflation is unfair for the simple reason that it acts like an amoral version of Robin Hood, stealing from some even as others are rewarded. If you’re a poor pensioner with savings mostly in the form of cash, the chances are that you’re going to lose out: over time, your savings will be worth less and less in “real terms”.
