When one compares it with other public enemies like drug abuse or terrorism, one would still find that those issues would also affect only a segment of the society at any given time. Since inflation affects everyone and people have limited prospects of escaping it, it is considered as the public enemy number one. Some amusing stories about inflation In the recent history, there have been many countries which have been hit by hyper inflation. Of them, the most prominent case has been the hyper-inflation in Germany after the First World War, where inflation accelerated to 1,000,000 % per annum. Other noteworthy examples are Bolivia (25000 % p.a. ); Russia (2000 %); Israel (1500 %); Turkey (again 1500 %) and currently Zimbabwe (3700 % and still rising). When prices rise at these high rates, the first casualty would be the currency of the country. No one would like to accept the domestic currency, because its value would fall by the minute. Instead, people would start to accept other types of hard currencies like the US Dollar. If there is a shortage of those hard currencies, people would invent their own currencies. In Germany, with that hyper-inflation in which prices rose by 2 % every minute, German Mark ceased to function as money. Instead, people started to use cigarettes, chocolate bars or empty bottles as the medium of exchange. Then, there is the story of those two brothers who inherited a sizeable wealth from their father.
Online shopping has surged during the pandemic, accelerating a pre-existing trend. The latest retail sales figures indicate that it accounts for 35% of total sales, up from 20% in February last year. Online retailing has the potential to be more productive than through physical stores, and there is some evidence from the last decade of this already happening. Higher productivity growth in retailing has not been fully matched by higher wage growth, and this lower unit cost growth may have contributed to the relative weakness of domestic consumer prices in recent years (Tenreyro, 2020). Covid has also caused changes in consumer spending patterns. Much of this has been of necessity, but if some changes to consumer spending habits persist – for instance if tastes change – the pattern of production in the economy is also likely to change. The question is how will such a process of more structural change in the economy happen, and what will be the impact? What are the implications of the changes we are seeing in the economy? This is a very big question, so what follows is necessarily quite high level. The answer to the question is surrounded by a great deal of uncertainty, given the scale and speed of the shock that has caused the changes. Let me start with employment and the labour market. In normal UK economic cycles, falls in output are accompanied initially by relatively small falls in hours worked and then later by larger falls in employment.