Inflation myths

Why is 2 per cent annual inflation desirable (your report, 20 May?

It debauches our currency by 100 per cent in only 36 years, 200 per cent in 57 years and 300 per cent in our “four-score years and ten”, encourages excessive borrowing, robs lenders, favours borrowers, and distorts wage negotiations, capital investment plans and economies generally, house-prices being an obvious example.

It can too easily become a self-fulfilling or even self-exceeding prophecy.

The usual pretext is to avoid purchases being deferred in the hope of future lower prices, resulting in prolonged deflation.

But most of our expenditure is necessary, current and cannot be deferred. The rest includes developments or inventions in electronic gadgetry and white goods which we all know will probably come down in price, but that does not seem to discourage many from buying them immediately.

We should limit our official inflation rate(s) to a realistic definition of “necessary” expenditure, akin to the wartime “Woolton” diet, though clearly more wide-ranging and not quite so draconian! Anything else is purely personal choice and no business of politicians.

John Birkett

Horseleys Park

St Andrews