Don’t listen to the doom-mongers: A rise in inflation isn’t some kind of crisis

It takes quite a determined Cassandra to see the rise in Consumer Prices Index (CPI) from 0.6 per cent in August to one per cent in September as some kind of crisis, not that that will stop the holdouts of the Remain campaign from trying to do so. When CPI fell below one per cent at the end of 2014, you might remember, there were dark warnings about the threat of deflation – with the horrors that would imply for borrowers, who would see the real value of their debts increase. Now, some are trying to present a rise to one per cent as bad news, with former Monetary Policy Committee member Andrew Sentance, for example, calling it the ‘tip of an inflationary iceberg’.

Steady on. Sure, inflation is likely to increase over the next few months. It may even double – in which case it would hit the Bank of England’s target.