Erikka Askeland: Fasten your seatbelts ... we are in for a bumpy ride

JUST look at the bargains you can pick up on the high street these days. It's quite a challenge to find any shops that aren't emblazoned with brightly-coloured signs proclaiming goods going cheap at 50 per cent, or even 70 per cent off.

Many of us are also signing up for heavily-discounted deals on services, such as meals out, and even more obscure things like falconry or boat trips, using discount voucher sites such as Groupon or Itison.

The discounting is such that it has actually managed to notch down the UK's persistently high rate of inflation. In the 12 months to June, consumer prices rose 4.2 per cent on a year earlier, down from 4.5 per cent in May, which beat almost all the forecasters' expectations that the number would remain flat. But is it time to break out the bubbly (bought in a BOGOF deal, obviously) because the threat of rampant inflation is dimming? Unfortunately, not yet.

The fall in the price of leisure activities and the season's latest sherbet-coloured stilettos is, we have heard often, because some UK consumers are worriedly hanging on to their hard-earned, while the rest are skint. But what this masks is the fact that the price of necessities - like food - is still becoming more expensive. Nor do the latest figures include the sharp rises in heating and electric bills due to thump household budgets, again, in coming months.

But surely bargains are "Good Things", driving mobs of shoppers to rifle through the sale rails, elbows at the ready to ward off competition for the last pair of cut-price open-toed boots? This that has been dubbed "Wal-Mart deflation", where you get more for less. And yes it can be good, for the buyer at least. But the benefit is only when deflation is gentle and only when it is in the short term. As prices fall and then stay low, the shops, chiropractors, beauticians and kayaking firms who increasingly rely on offering vast discounts struggle to make ends meet, which means laying off staff and reducing investment, leading to a further slip down the economic spiral.

Already, despite reports from the British Retail Consortium that sale prices were at least getting people through the door last month, the gaps emerging on the high street are starting to resemble the mouth of a boxer on a losing streak.

The last great bout of prolonged deflation, lest we forget, was the Great Depression and, although not so dramatic, Japan in the 1990s. The UK economy is weak, and many observers are starting to think it will remain so for years - meaning interest rates will stay low longer and a deflation risk means the Bank of England may even have to consider a new spurt of quantitative easing.

But while many will clamour for this, money never comes for free, and the monetary policy committee (MPC) faces a tricky balancing act of slamming the brakes on the jalopy economy with tighter fiscal policy or risk making the national balance sheet look more like that of Italy or Spain. Former MPC member Danny Blanchflower, has persistently warned of the danger of deflation. This put him at loggerheads with the hawks, such as another former MPC member, Andrew "death" Sentance, who maintained that the economy was at little risk of recession even after the catastrophe-triggering collapse of Lehman Brothers. It is not unusual for economists to disagree, as practice has a nasty habit of proving their theories wrong. The lowering of the rate of inflation is welcome, but still well above the stability engendered by the MPC's target of 2 per cent. But it is also one of the strongest warnings yet that we're in for a bumpy ride.Look further afield when domestic market is flat

WHAT might save us from an enduring economic malaise is exports. If customers at home aren't buying, the sure-fire way to get paid is to sell to markets that will.

Which explains the cheering when trade quango Scottish Development International revealed that Scottish food exports - not even including whisky - broke through the 1 billion barrier last year.

But does it mean Scotland is exporting more salmon and oatcakes, or are these products just enjoying an inflationary rise? Although there is some evidence volumes are up too, the figures provided from HM Revenue & Customs do no provide a breakdown.

But even if production growth is constrained - a major issue facing the Scottish farmed salmon industry - at least the exporters are getting a good return on their work.