Yes, inflation is rising again, and if you’re voicing a frustration a lot of people feel right now, it’s worth unpacking it carefully, because when inflation is rising again, it isn’t just an abstract number. It reshapes daily life, redistributes power, and exposes deep structural weaknesses in an economy.
Below is a long-form, plain-English breakdown of what rising inflation really means, why it feels like “poison,” and what would actually need to change for inflation to fall without permanently weakening the economy.
1. What rising inflation really means for ordinary people
At its core, inflation is the silent erosion of purchasing power. You’re not necessarily getting poorer on paper—but your money buys less every month.
a) Wages lag behind prices
Most people don’t get inflation-indexed pay rises:
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Food, fuel, rent, insurance, and utilities rise now
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Wages adjust slowly, if at all
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Result: real wages fall, even if nominal wages rise
This is why inflation feels like a pay cut you never agreed to.
b) Savings are punished
Inflation:
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Eats away at cash savings
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Forces people into riskier assets just to “stand still”
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Rewards debtors and punishes savers
If inflation is 7% and your savings earn 3%, you’re losing 4% a year in real terms—quietly, relentlessly.
c) Inequality widens
Inflation doesn’t hit everyone equally:
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Asset owners (property, shares) often benefit
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Renters and wage earners suffer
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Big corporations can raise prices; individuals can’t
So inflation isn’t just an economic issue—it’s a social and political accelerant.
2. Why governments and central banks keep choosing “more poison”
You’re right to sense a paradox:
The cure for inflation often looks like more pain, and sometimes it is.
a) How inflation usually starts
Inflation tends to surge when:
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Governments spend heavily (deficits)
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Central banks print money or keep rates too low
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Supply chains break
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Energy and food prices spike
In recent years, we had all of the above at once.
b) The Reserve Bank’s blunt tool
Central banks mostly have one weapon: interest rates.
They raise rates to:
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Reduce borrowing
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Slow spending
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Cool asset prices
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Increase unemployment just enough to weaken demand
That last point is uncomfortable but crucial:
Rate hikes work by creating economic pain.
This is why people feel like the “medicine” is poison—because it is deliberately contractionary.
c) Why do they keep doing it anyway
From a central bank’s perspective:
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Inflation left unchecked destroys trust in money
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Once expectations shift, inflation feeds on itself
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Stopping it early is less painful than stopping it late
They’re not aiming to help households thrive; they’re aiming to stop the system from overheating and losing credibility.
3. Why rate hikes alone won’t fix the deeper problem
Here’s the uncomfortable truth:
Monetary policy is being asked to fix problems it did not create.
a) Inflation today isn’t purely “too much demand”
A lot of modern inflation comes from:
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Energy costs
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Housing shortages
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Broken supply chains
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Market concentration (pricing power)
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Government fiscal choices
Raising rates doesn’t:
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Build houses
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Produce energy
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Increase competition
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Fix productivity
It just suppresses demand and hopes the rest sorts itself out.
b) The risk: stagnation instead of strength
If rates rise while structural issues remain:
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Growth slows
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Investment falls
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Productivity stagnates
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Living standards decline
This is how you get a weak economy with lower inflation—not a strong one.
4. What actually has to change to tame inflation sustainably
To kill inflation and rebuild economic strength, several things must happen at once. Rate hikes alone won’t do it.
1. Fiscal discipline with smarter spending
Governments must:
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Stop using deficits as a permanent crutch
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Target spending toward productivity (infrastructure, skills, energy)
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Avoid demand-boosting handouts during inflationary periods
Inflation thrives when governments spend as if money has no cost.
2. Productivity must rise again
This is the most neglected issue.
A strong economy requires:
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Better infrastructure
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Skills and education aligned with real output
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Technology adoption
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Less red tape for productive businesses
Without productivity growth:
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Higher wages = higher prices
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Growth becomes inflationary by default
3. Housing supply must increase
Housing inflation poisons everything:
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Wages chase rent
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Families delay children
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Labor mobility collapses
Fixing this means:
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Faster approvals
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Zoning reform
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Infrastructure tied to housing
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Less speculation-driven policy
Until housing is fixed, inflation pressure never fully disappears.
4. Energy policy must prioritise affordability and reliability
Energy is a base input to everything.
If energy is:
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Scarce
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Volatile
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Politically constrained
Then inflation becomes structural.
A strong economy needs:
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Stable baseload power
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Long-term planning
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Price predictability for the industry
5. Central banks must stop pretending neutrality
Central banks aren’t neutral referees—they shape outcomes.
They need to:
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Coordinate better with fiscal authorities
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Acknowledge supply-side inflation
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Avoid crushing productive sectors while protecting asset bubbles
Credibility matters—but so does realism.
5. What a “strong again” economy actually looks like
A strong economy isn’t one with:
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Cheap money forever
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Constant stimulus
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Ever-rising asset prices
It’s one where:
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Money holds value
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Wages grow with productivity
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Savings are rewarded
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Investment goes into production, not speculation
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Inflation is low because supply is strong, not because demand is crushed
That kind of strength is slower to build—but far more durable.
6. The hard truth
Inflation isn’t an accident.
It’s the bill for years of:
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Easy money
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Political short-termism
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Avoiding structural reform
Rate hikes are painful—but they’re the consequence, not the cause.
If governments keep relying on central banks to clean up their mess, then yes—
The “medicine” will keep tasting like poison, and the patient will keep getting weaker instead of healthier.
See also: The worst tax in the country
