I think it is fair to say that most recent inflationary periods have ended with a recession. Historically inflation has been caused by overheating in the economy where demand outpaces supply leading to price rises and inflation. Central banks seek to contract money supply and dampen demand by the raising interest rates, with the by-product often being a recession.

In theory a recession could be avoided by getting the rate of interest rate rises and their timings just right. However, doing so is very difficult as evidenced by many of the larger European economies who seem be on the right path for inflation, but are in recession. The UK has so far avoided recession but has higher inflation.

The below graph below shows UK GDP against inflation since 1970 to 2018, and it is pretty clear that there is some sort of relationship between them. Recessions are shown when the blue line dips below the x- axis.

Source: Office for National Statistics

However, particularly in current circumstances there are also supply-side factors to consider. Inflation can be caused by both demand-side and supply-side factors. While demand-driven inflation tends to be more closely linked with economic growth, supply-side factors, such as rising input costs or disruptions in the production chain, can result in "cost-push" inflation. If an economy successfully manages these supply-side shocks through productivity gains, innovation, or diversification, it may be able to escape a recession while taming inflation. Think Ukraine and Covid. Tweaking interest rates doesn’t solve these issues.

Supply side factors aside, it therefore seems the easiest way of choking of inflation is to force a recession, which is not ideal (certainly politically). The odd situation we have at the moment is the Bank of England saying that they do not want to hurt businesses and homeowners, which is probably strictly speaking the case, but is the surest way of getting rid of inflation.

The most recent example of a soft landing was the US during the early 1990s when inflation was brought down and a recession just avoided. So this does show that it is possible.

It seems that for the moment the media and certain “Government sources” have turned on the Bank of England, but I think the real test will be in say four months’ time. If inflation does in fact fall and the UK avoids recession, then I suspect that, all of a sudden, there will be a fair number of people seeking to claim the credit.