With inflation rates in the US and the UK both trending upwards in the early part of 2011, the increased cost of living is very much a hot topic. Throughout the modern period, inflation has been one of the key indicators exercising the minds of economic theorists. The reasons for the birth of this phenomenon are disputed, but the Price Revolution of the late fifteenth to early sixteenth century is widely recognised as the time of its inception.

Precious Metals

In the early sixteenth century, with the Spanish conquest of the Americas, and its attendant increase in the amount of gold and silver brought across the Atlantic to Europe, in full swing, Europe found itself with an abundant supply of precious metals. German silver production had also increased in the late fifteenth century, adding to the glut. Many commentators, perhaps commencing with studies conducted by the University of Salamanca in the mid-sixteenth century, attribute the first dramatic (although not by modern standards) increase in prices to this expansion of available wealth.

The sixfold increase in prices throughout the sixteenth century would not be considered extravagant today, particularly in relation to the sixty-six fold increase in UK prices during the course of the twentieth century, but it was a profound shock in a Europe accustomed to far more stable conditions. The blame for the price increases was commonly laid at the door of unscrupulous money-lenders and monopolists at the time. Perhaps, parallels can be drawn with the attitude towards banks since the recent banking crisis. These opinions certainly did nothing to help the already prevalent tensions between rulers and ruled at a time when, certainly in Western Europe, considerable social change was brewing.