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When looking back at the year gone by, it is rather hard to know where to start.
The death of a monarch, war in mainland Europe, the shortest running prime minister of all time. It has been an extraordinary 12 months of news, especially for the economy. Rather than running through the whole thing in narrative form, here are four of the biggest stories – along with the charts that help tell them.
1. The return of inflation
That 2022 was going to be a year with high inflation was hardly a surprise. It was clear from the middle of last year that prices were on the rise, and by the time the Bank of England began raising interest rates in December 2021, it already looked slightly behind the curve.
All the same, the leap in prices in 2022 was both dramatic and historic. You can see it for yourself in the chart of the period. By October, the consumer price index (CPI) was telling us that prices were rising at an annual rate of 11.1 per cent – the highest rate since 1981.
The striking thing about high inflation is how quickly it feeds into one’s way of life. There is the big picture: the fact that we’re all worse off, because our earnings aren’t rising at the same rate. There’s the impact it has on businesses, who are seeing their margins compressed and having to wrestle with how much of their cost increases to pass onto customers. And then there are the knock on consequences we’re still living through.
One of those consequences is a sharp increase in industrial action. The funny thing, when you look at the shape of that CPI chart, is how similar those lines are to another data series – the one showing the frequency of industrial action in this country. The UK lost well over a million working days to strikes towards the end of 2022 (the final figure will be considerably higher, when it eventually gets published).
But when you overlay those two data series, you can see that given where CPI rose to and…
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