THE cankerous influence of high inflation in the economy is an affliction that needs no spelling out to anyone who endured its effects a generation ago and suffered in the jobs holocaust that came with the "sound money" Thatcherite purge to get rid of it.

But today, as new official figures were once again showing that the rate remains at rock bottom, at around the lowest it has been since 1963, some sectors of the country were being made to endure a painful cure.

For having put up interest rates twice already in recent months to eradicate inflation pressure that hardly exists, the Bank of England was still being forecast to put them up even higher - perhaps by a further half of one per cent to six per cent by early next year.

Yet, perplexingly, this tough policy is being pursued by the Bank when it itself says inflation is likely to carry on going down still further next year and is unlikely to rise up to the modest level of the government's target before the end of 2001.

But why the Bank is increasing its dosage of harsh interest-rate medicine to the country when the disease of inflation is so dormant it is virtually dead is not an abstract economic question.

For, as we hear today from the giant engineering and electrical trade union, the AEEU, what are being killed off because of this policy are tens of thousands of jobs in the manufacturing areas of the North and Midlands.

As we have observed with recent bouts of job-shedding in East Lancashire, the union's claim of 160,000 jobs being lost in UK manufacturing in the past year suggests that the concomitant strengthening of the pound with each interest rate rise is hitting exporting firms and their employees too hard.

So why pile on the agony? It would seem that, as ever, policy makers find it hard to focus beyond the South East and the Bank is taking the economic temperature for the country as a whole in that one area, where the housing market is afflicted by inflationary fever.

But why should the rest of Britain, its industry and employment, suffer for the Bank's attempts to cool it down?

It is over-cautious and unfair.

The government ought, as the AEEU suggests, to intervene to burst this bubble - ideally by hiking stamp duty on housing deals over six figures.

It is madness to have people thrown on the dole up here while house sellers in London are laughing all the way to the bank.

Converted for the new archive on 14 July 2000. Some images and formatting may have been lost in the conversion.