INFLATION is the canary in the economic coalmine. When that little yellow feathered fellow falls off his perch, and inflation rises steeply, it is time to put the brakes on the economy, and fast.
So it is good to report, as we do in our news pages today, that inflation figures are still relatively low. March was the third month in a row inflation has been under the Bank of England’s target rate of 2 per cent. In fact, it is the lowest rate since October 2009.
The canary is still tweeting happily in its cage, and long may it do so.
This is very encouraging. Any significant rise in inflation could be the trigger for an increase in interest rates – a moment it would be good to stave off for as long as possible.
There can be no denying we are emerging steadily out of the depression of recent years. This recovery is no chimera – it is real. But it is still fragile and patchy, with much of Britain still lagging behind the current boom in London and the south-east of England.
It would be wise to be both careful and cautious.
Keeping interest rates low, in parallel with low inflation, is the key to a sustained and sustainable recovery. Growth at any cost would be a disaster for this country. We have seen the effects of boom and bust – our economy and indeed wider society bears the scars.
In particular we must be careful about the rapidly expanding bubble in the London property market. Yes, it is a potential problem, but we would be foolish to over-react. To do so would be to risk strangling the recovery in the rest of Britain at birth.
The news on inflation was welcomed by politicians yesterday, but for one party leader it perhaps gave some pause for thought.
Ed Miliband has banked Labour’s hopes of making it into Downing Street next spring on what he calls “the cost of living crisis”. Mr Miliband’s key strategy is founded on market interventions – “pre-distribution” in the new terminology – to offset the effect of an economy he says cannot deliver for ordinary families.
And yet with wages now set to outpace inflation, those average families may soon start to feel less like the economy has them by the throat.
A few more months of low inflation and rising wages, and they may feel as if they have a little financial breathing space for the first time in years.
Exactly how they will view the rival Tory and Labour camps in those circumstances remains to be seen. But can Mr Miliband and shadow chancellor Ed Balls count on them still feeling the squeeze come polling day, and turning to Labour for help?
Or will they see David Cameron and George Osborne as the men who made the tough decisions that were necessary to get Britain back on its feet again?
Old folk better be ready to party
IT IS an alarming thought. Would you want your aged parents or grandparents to be in an old people’s home where Silvio Berlusconi, the former Italian premier, had been sent to do community service?
Would they be safe? Is the organiser of the infamous “bunga-bunga” parties really the right kind of company for the elderly and occasionally infirm?
There must surely be a danger that somebody would put their hip out, at the very least. Has the care home’s Health and Safety department been informed about Mr Berlusconi’s arrival? One sincerely hopes so.
Mr Berlusconi’s lawyers had argued in favour of community service as opposed to the alternative under consideration by the court – a form of house arrest.
They may have calculated that four hours a week of inconvenience was preferable to the indignity of the former prime minister being limited – and monitored – in his movements.
But the work at the care home may be exactly what Mr Berlusconi needs – a dose of humble service in the care of others, rather than the self-aggrandisement that characterised his business and political career for many decades.
And who knows, maybe the arrival of the sprightly 77-year-old playboy will be a tonic for the care home residents.
Perhaps the old ladies will be find him flirtatiously charming, and the old gents find his stories back-slappingly funny (if slightly off-colour).
Perhaps every old folks home needs a fallen politician with a good line in anecdotes to liven up proceedings. Is Jeffrey Archer free?