If inflation is too much money chasing too few goods, it is about to rise.
This is because the pandemic has seen a big rise in the money stock. Since the end of 2019 the M4 measure of it (which comprises the bank deposits of households and non-bank businesses) has risen by 15.1 per cent or £379bn in the UK.
A big reason for this is that the government borrowed money to support incomes during the pandemic. Such borrowing tends to raise the money stock simply because when the government spends more than it raises in taxes it puts more money into our hands than it takes out. In normal times, this impact of borrowing on the money stock is cancelled out by the government issuing bonds: when we buy bonds from the government our bank deposits shrink. In the last few months, however, the Bank of England has bought bonds and so government borrowing has indeed boosted the money stock.