The Governor of the Bank of England recently had to write to the UK Chancellor explaining a departure from the Bank of England’s target range, making very similar arguments to the ones we have been using for treatment of oil and food price shocks, and warning that worse is to come.
In an environment of price stability possible distortions of tax systems are reduced. The related improvement in the efficient allocation of production factors may help to enhance the production potential of the economy. Also from a social point of view, inflation is not welcome. It leads to a 'random' redistribution of wealth between economic actors, to the detriment of the most vulnerable.