Memories of grim times and kipper ties in 70s

Apr 17 2008 by Peter Jackson, The Journal

HIT television programme Life on Mars has resurrect- ed memories of the 1970s, and, let’s be honest, some of those memories are pretty grim.

It was an age of The Black and White Minstrel Show, exaggerated sideburns, large check sports jackets and Some Mothers Do ’Ave’ Em.

It was also an age of inflation.

After the oil price quadrupled in 1973, in nearly every subsequent year the inflation rate was above 10%, peaking at 24% in 1975.

And this ghost from the past wagged a warning bony finger at us at the start of the week with the news that UK producer inflation reached its highest rate for nearly 17 years in March.

At 6.2% it was up on February’s 5.9% and represented the highest annual rate since May 1991. It was also revealed that the prices firms paid for raw materials went up by 20.6% last year.

Every household is only too familiar with rising grocery bills, but, seen in the light of food riots in Bangladesh and Haiti, where rising food prices mean real hunger, rising raw material costs take on rather more urgency, and it all starts to look eerily like the 1970s.

Then too, inflation was driven by high oil prices resulting from war in the Middle East after Egypt and Syria attacked Israel in 1973, leading to the oil embargo.

Let us not, however, overdo the comparison. Goodness knows, we face economic threats, but I don’t genuinely believe inflation to be one of them.

For one thing, inflation in the 1970s was much higher – and we are talking about 24% compared to 2.5%. Then it applied to every part of the economy, whereas now prices for many consumer goods are stable and the prices of some are still falling.

The end of the Cold War helped create the conditions for a truly global marketplace and that, coupled with the development of the internet, means anyone in the world can search for the lowest available price and, usually, have it delivered to their door within a few days. This in itself, exerts a strong downward pressure on prices.

Not only that, but we are seeing a bursting bubble of consumer confidence. The threat is not too much demand, but too little.