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Assess the extent to which UK Governments have successfully controlled inflation in recent years.
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Assess the extent to which UK Governments have successfully controlled inflation in recent years The aim of the Government has always been to keep inflation low whilst maintaining low unemployment and high growth. Over recent years (roughly 1990 to 2003), there has been a dramatic change in the level of inflation, ranging from about 9.5% to 2%, a huge change in terms of inflation. As can be seen by the graph below, before 1993, the UK has suffered large levels of inflation. In the 1980s, a change in the interest rate was the primary way to influence inflation. For example if expenditure (aggregate demand) is too high, inflation is high and the government reacts by increasing interest rates. However this had a bad effect in the short run in 1988, as mortgage repayment, resulting in a higher Retail Price Index. This increase of inflation then caused wage price spiralling, and inflation...
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