Inflation and Sunak – Who Will Win?

A newcomer to politics, Sunak’s term as Chancellor of the Exchequer has been marked with struggles such as the war in Ukraine and the Sars Cov-2 pandemic. But now, he must struggle against a new foe – inflation. As inflation rates hit 6.2%, the Chancellor unveiled his spring budget, which brought tax cuts and responses to the uncontrolled inflation. But is it enough? 

Why is the inflation so rampant?  Inflation comes in three main forms. Demand pull inflation is where a lack of products or services increases their price. Cost pull inflation is where the cost of services or products rises, forcing businesses to raise their prices as well. Finally, built in inflation is where workers demand better wages to meet higher living standards. The Sars Cov-2 pandemic caused both demand and cost pull inflation. The present war in Ukraine caused demand pull inflation of oil prices, resulting in built in inflation.

To find out how inflation will affect The Beacon, we turned to Mr. Privett, ex-Beacon head boy and Self and Society at The Beacon. Here are his responses to our three questions. 

“How might inflation affect your lessons?”

His response was that inflation was going to affect everyone in the world, and we discussed in class how money is a big part of our lives. At The Beacon, we may need to make energy cuts and keep the windows shut.

“Might you have to change the real money game?” 

He responded: “yes, we definitely need to change it – as it is all about preparing boys for the real world – and it is quite inaccurate owing to low energy costs.” 

“How will inflation affect you personally?” 

His reply was: “I will definitely need to change my lifestyle, for example showering at the gym or doing a 20 minute walk instead of a 3 minute drive.”

So, what is Sunak doing to counteract inflation? He is reducing fuel duties, trying to prevent the rise of oil prices through cost pull inflation. He is cutting National Insurance tax to reduce inflation by built in inflation. However, his introduction of a student tax may still cause inflation to rise through built in inflation.

By James B and Bay W