Farm Finance: Tackle the root cause of inflation
The ECB is misguided in its assumptions that increasing interest rates will have an impact on reducing inflation rates by reducing demand for food or fuel.
The surge in fuel prices over the past fortnight has yet to feed into the inflation figures, meaning the inflation rate is likely to spike higher. Meanwhile, the medium-term effect of increased fuel prices on production and transport will continue to feed into increased prices for goods over the medium term.
These words formed part of this column in mid-March, when inflation reached a 20-year high, but are even more relevant now than they were three months ago as inflation reaches a 38-year high of 7.8%.
