I always wonder where song writers get the inspiration for a particular song. Many different things inspire them including people, places, pets, experiences, ideas, books, movies, etc. Some are impossible to figure out unless the song writer explains the source, but others are pretty easy. The source of the Beatle song Penny Lane is obvious. This song was first released as a single and then on the album Magical Mystery Tour.
The Beatles grew in Liverpool, England. Penny Lane is a Liverpool street in a business district. The lyrics of the song refer to businesses along the street and to people that you might see there. There are some obscure slang terms and some surreal imagery as well. Ian MacDonald claimed that the song was inspired by Paul McCartney taking LSD but McCartney claims that he first took LSD months after the song was written. There are also some interesting musical elements such as the use of different instruments to accent reference to different people.
All in all, this is a great Beatle song, whatever the inspiration!