Inflation

Inflation is largely being driven up by two things. 

1. Demand for fuel outstripping demand. 

Wage increases will sustain demand beyond what can be supplied but Inflation from this has probably peeked. However, when fuel prices drop the newly increased wages will be loosed for other spending creating a new driver for inflation.

2. Covid funding, such as furlough, which has to be repaid. 

Higher tax income from wage increases would repay very little of this. A solution would be tax rate increases and this needs to be heavily weighted on those with the deepest pockets, particularly those who benefitted most from the extra government spending during covid. 

High inflation would reduce this as a proportion but to the detriment of savers, people on a fixed income, and future pensions. A balance needs to be found.

If pay rises were weighted to the lowest earners, who have no way to reduce their outgoings, the worst consequences of inflation driven poverty could be avoided, as less money will become additional spending in future years, and lower income households need to spend most of the money they get putting it back in circulation as a driver for growth.