TThe level of inflation poses a risk to the UK economy, but not in the way that you might think. Inflation is worryingly low, rather than worryingly high.
That may seem a perverse idea at a time when the cost of living as measured by the consumer prices index has risen to its highest level in a year. But consider the following.
The annual inflation rate did not rise in January because retailers were jacking up their prices. On the contrary, a representative sample of goods and services measured each month by the Office for National Statistics was 0.8% cheaper in January than it was in December.
