In the business community the assumption was that any increase in costs could be easily passed on into prices, and the unions assumed that all wages would be indexed to rising inflation. The situation is very different now. After more than a decade of low and stable inflation, inflationary expectations are better anchored.
Discipline in goods markets from domestic and foreign competitors means the old 'cost plus' mentality no longer prevails. While pass-through at the first round still occurs, as the rise in retail petrol prices demonstrates, subsequent price pressures are often absorbed.