Markets have no idea where the economy is headed and interest rate rises could easily push the UK back into recession
• David Blanchflower is an economist
First, a little primer on inflation. The UK inflation rate for June 2017 as measured by the consumer prices index (CPI) was 2.6%, the Office for National Statistics announced this week. That is to say that the cost of living, measured by prices of a representative “basket of goods” from computer games to children’s clothing, rose by 2.6% over the prior 12-month period, although it was down from 2.9% the month before.
This rise was less than experts had expected. But the predictions are that we will see numbers over 3% later this year. After that inflation is expected to fall back again towards zero.
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Business confidence has fallen and is now at its lowest point for almost six years