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You seem to want to make a vague political point rather than an economic one. It's a view widely accepted that it was the devaluation of 1967 that set the hare running for the inflation that followed and that view seems anything but "far-fetched", and in fact highly plausible.Inflation didnt reach 24% until 8 years later in 1975. Blaming this on a 14% devaluation in 1967 seems a little far-fetched. A far greater cause was surely economic mismanagement in the subsequent years.
In 1967 there hadn't been double digit inflation since the beginning of WW2 and in the couple of years immediately preceding 1967 the rate was falling - down from 4.8% to reach just 2.5% in 1967. After the 1967 devaluation the rate then turned direction and trended relentlessly upwards, rising in every single year apart from one minor respite in 1972 from 9.4% to 7.1%, before continuing upwards again the following year to peak at 24.5% in 1975. There certainly wasn’t a single factor but that tends to be the way inflation works, an initial trigger followed by increasing momentum.
You might choose to argue that greater political resistance to wage demands would have helped or more obviously that the rise in oil prices stoked the fire but that wouldn't be a counter argument to the view that the initial trigger was the earlier devaluation and the immediate effect it had on prices and then wage demands.0 -
Rollinghome wrote: »You seem to want to make a vague political point rather than an economic one. It's a view widely accepted that it was the devaluation of 1967 that set the hare running for the inflation that followed and that view seems anything but "far-fetched", and in fact highly plausible.
In 1967 there hadn't been double digit inflation since the beginning of WW2 and in the couple of years immediately preceding 1967 the rate was falling - down from 4.8% to reach just 2.5% in 1967. After the 1967 devaluation the rate then turned direction and trended relentlessly upwards, rising in every single year apart from one minor respite in 1972 from 9.4% to 7.1%, before continuing upwards again the following year to peak at 24.5% in 1975. There certainly wasn’t a single factor but that tends to be the way inflation works, an initial trigger followed by increasing momentum.
You might choose to argue that greater political resistance to wage demands would have helped or more obviously that the rise in oil prices stoked the fire but that wouldn't be a counter argument to the view that the initial trigger was the earlier devaluation and the immediate effect it had on prices and then wage demands.
No political points - governments of both parties were in power over the period in question.
The relatively small drop in the £ in 1967 didnt happen in a vacuum. It was forced on the then government by global economic forces that eventually led to the collapse of the fixed currency rate system. So a symptom rather than a cause of what subsequently happened.
Note that a far higher devaluation in the £ occured in the 1981-1985 time frame without the same very high inflation rates.0
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