In many countries around the world, inflation has hit its highest level in decades, with Russia’s invasion of Ukraine sending energy and food prices skywards.
Central banks are reacting by raising interest rates, inflaming borrowing costs, and choking everyday incomes.
Higher inflation is now forecast to linger into 2023, with expectations of interest rate rises leading markets to become optimistic that price pressures can be contained in the medium term.
However, high-interest rates increase the chances of recession, with economists fearing a return to the stagflation (persistent price pressures and weak growth) of the 1970s.
