Illustrating Inflation

What is inflation? Explaining inflation through cartoons from our collection.

Inflation Balloon (2008) by David SimondsBank of England Museum

Inflation is a word that’s used a lot.

But what is it really, and how does it affect you?

Inflation Balloon, David Simonds, 2008, From the collection of: Bank of England Museum
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Is it me, or are things getting worse?, Kathryn Lamb, 2022, From the collection of: Bank of England Museum
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Inflation Basket, Christopher "Kipper" Williams, 2013, From the collection of: Bank of England Museum
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The Old Lady in 2019, Peter Fashesin-Souza, July 2019, From the collection of: Bank of England Museum
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Our museum collects original drawings of cartoons as a way of recording reactions to financial events. This online exhibition explains inflation through some of the cartoons in our collection.

Is it me, or are things getting worse? (2022) by Kathryn LambBank of England Museum

Inflation describes when prices are rising.

How quickly prices go up is called the rate of inflation. Imagine a pint of milk used to cost 90 pence a year ago. If today it costs 99 pence the rate of inflation would be 10%.

The Bank of England is the UK’s central bank.

One of its main goals is to try and keep inflation at around 2%. Any faster, and your spending power would be reduced too quickly.

Is it me, or are things getting worse? (2022) by Kathryn LambBank of England Museum

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It’s particularly bad if prices of things like food and energy are rising fast because these are the essentials we rely on every day. Much like the people in this cartoon, you might be left feeling like you’re getting a bad deal.

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So why do we need inflation at all?

After all, wouldn’t we all be better off if prices went down (also known as deflation)? While it seems good for your wallet, it can be bad for the economy. It’s sometimes described as the economy ‘slowing down’ too much.

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Think of it on a larger scale: if you buy a house, you hope it'll be worth more when you sell it. If you worried it would go down in value, you might not buy it. If everyone reduces their spending, then companies could fail, and people might lose their jobs or have wages cut.

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Low and stable inflation means your possessions keep their value and the economy continues to grow, without spinning out of control.

Inflation Balloon (2008) by David SimondsBank of England Museum

So what exactly causes inflation to go up or down?

This cartoon uses a hot air balloon to explain. Just as the weather affects a hot air balloon, economic factors affect the rate of inflation. In the basket are Bank officials, steering the balloon.

Inflation Balloon (2008) by David SimondsBank of England Museum

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On the left-hand or ‘warm’ side of the cartoon, the artist shows some of the things that make people spend more. This means there is more money in the economy.

Some things encourage people to spend more money, including…

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…a reduction in income tax.

With less tax taken out of your wages, you have more money to spend. Sounds great, but with more people willing to buy things, the demand for products goes up. Businesses can seize the opportunity for increased profit and raise their prices, leading to inflation.

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Or imagine there’s an economic boom.

Economic booms are short-lived periods where the economy is growing rapidly and there’s low unemployment. During booms people have more money to spend. Some producers will not be able to keep up with the demand for goods, so prices rise.

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On the right-hand, or ‘cool’ side of the cartoon, are things that can make people spend less money like...

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...international turbulence.

If there is a war, for example, then trade between countries might slow down or stop completely. Investors might be unwilling to invest large amounts of money during periods of uncertainty. This can halt the supply of some products, making their price go up.

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Energy prices also have a strong effect on inflation.

You see this at home in your energy bill. But if energy prices go up, the cost to make and transport products also rises, so products become more expensive. Not only do you have less money to spend because more of it is going to bills, but the items themselves cost more.

Inflation Basket (2013) by Christopher "Kipper" WilliamsBank of England Museum

But how do we know prices are going up or down?

We might feel it intuitively in our wallets, but there’s a more technical way the inflation rate is calculated.

Each year, the prices of over 700 household items are collected by the Office for National Statistics (ONS). These goods form something known as the inflation basket.

Inflation Basket (2013) by Christopher "Kipper" WilliamsBank of England Museum

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This basket measures how these item’s prices change over time – the real-world impact of inflation. Basically, the inflation basket helps the ONS understand how the change in prices affects your spending habits, as well as the cost of living.

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Each year, items in the inflation basket are changed to best represent what we buy. The basket started over 70 years ago and has become a time capsule for trends and inventions.
For example, video streaming services were added in 2014 and a year later, DVD recorders were removed.

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This cartoon was made when eBooks were added to the basket.

Fifty Shades of Grey by E L James was originally self-published as an eBook in 2011. With 35 million copies, in both e-book and print form, sold between 2011 and 2019, this cartoon jokes that the book may have influenced the addition of eBooks (and more) to the basket…

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During the Covid-19 pandemic, hand sanitiser, loungewear and dumbbells for working out at home were added whilst men’s suits were removed from the inflation basket.

So, that’s how inflation affects you and how it’s measured. But what's the Bank of England's role in all of this?

The Bank of England has several tools it can use to help steer the UK economy. Let’s take a closer look.

The Old Lady in 2019 (July 2019) by Peter Fashesin-SouzaBank of England Museum

This cartoon was made to celebrate the 325th anniversary of the Bank of England in 2019. It shows a car which is shaped like the Bank of England’s headquarters in London.

The Old Lady in 2019 (July 2019) by Peter Fashesin-SouzaBank of England Museum

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It’s driven by the Old Lady of Threadneedle Street – a nickname for (and caricature of) the Bank of England. Her clothes are made of banknotes and she wears a determined expression as she steers the Bank along a hilly road, reflecting the ups and downs of the economy over time.

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One form of monetary policy is interest rates.

Interest is what you pay for borrowing money, and what banks pay you for saving money with them. The Bank of England sets the ‘Bank Rate’ which affects the interest rates that high street banks offer households and businesses.

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High interest rates make it more expensive to borrow money.

And, savers receive a better return on their savings.
 
This encourages people to save rather than spend and gradually reduces demand in the economy. This, in turn, helps bring down inflation.

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In this cartoon, the Old Lady has levers to control the car labelled ‘policy’, ‘interest rates’ and ‘quantitative easing.'

Which lever will she use to navigate each obstacle?

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When interest rates are low, the opposite is true.

It’s cheaper to borrow money, which encourages spending. At the same time the money earned on savings is lower, so there is less incentive to save. More spending means more demand for goods and services, pushing prices up.

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The third lever, and another form of monetary policy, is quantitative easing. Put simply, this is a different way of impacting the level of activity in the economy by buying and selling government or corporate bonds.     

Is it me, or are things getting worse? (2022) by Kathryn LambBank of England Museum


Sometimes, no matter what the Bank does, inflation can still go up or down. When big external forces are at work, inflation can be difficult to control.

Periods of high inflation can be tough. People feel the squeeze at the shops, in their utility bills, and in their mortgages.

Is it me, or are things getting worse? (2022) by Kathryn LambBank of England Museum

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In this cartoon, a couple look at a sign which reads: ‘One for the price of three!’ They remark: ‘Is it me – or are things getting worse?’

They feel they don’t have the same buying power as they did before.

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But, the Bank aims to ensure periods of high inflation are temporary.

Remember the hot air balloon? No matter how experienced the pilot, a storm can cause the hot air balloon to move.

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The same is true for inflation. A central bank can’t always stop inflation from going up or down, but it works to ensure it comes back to the target rate of 2%.

Political cartoons are made to be accessible, commenting on and analysing current affairs. But inflation and other economic terms aren’t always easy to decode. Hopefully, by drawing on some of these cartoons from our collection, we’ve helped clear the financial terminology fog.

Inflation Balloon, David Simonds, 2008, From the collection of: Bank of England Museum
,
Inflation Basket, Christopher "Kipper" Williams, 2013, From the collection of: Bank of England Museum
,
The Old Lady in 2019, Peter Fashesin-Souza, July 2019, From the collection of: Bank of England Museum
,
Is it me, or are things getting worse?, Kathryn Lamb, 2022, From the collection of: Bank of England Museum
Show lessRead more
Credits: Story

Illustrating Inflation is an exhibition produced by the Bank of England Museum. 
All images © Bank of England Museum except where stated.
Learn more about these topics:
What is inflation?
What is deflation?
What are interest rates?
Quantitative easing
How have prices changed over time?

With many thanks to the artists: 
Peter Fashesin-Souza, Kathryn Lamb, David Simonds, Christopher 'Kipper' Williams. 

Learn more about the Bank of England Museum on our website.

Credits: All media
The story featured may in some cases have been created by an independent third party and may not always represent the views of the institutions, listed below, who have supplied the content.

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