Inflation: Two per cent is welcome news, but life isn't suddenly easier and prices are still rising

Today the ONS says that inflation has finally declined to two per cent, the Bank of England’s target. It will inevitably - even more so during an election campaign - be seized on as evidence that the Tories’ economic plan “is working”. An who knows, perhaps early forecasts that this would happen were part of the thinking behind the election being called in the first place! Halving inflation, which at the time stood at 10.7 per cent, was one of Rishi Sunak’s five promises in January 2023. It’s one of the few that can be said to have been definitively kept, but credit where it is due, the halving happened and it has continued to fall.

But don’t be like the Daily Express. Don’t get confused and think that a drop in inflation means that things are cheaper and you are therefore better off. That’s really not what’s happening.

This comes after three years of inflation being at more than two per cent. And way more than two per cent for most of that time. Whether the reason is the Ukraine war, post-Brexit supply difficulties or whatever, we’ve all seen prices shoot up. Anyone who regularly does the supermarket shop can tell you, without fear of contradiction, that your week’s supplies cost a lot more than a couple of years back.

In layman’s terms, an Aldi shop now costs what a Tesco shop used to, and when you look at your Sainsbury’s receipt now it feels like a pricy Waitrose shop of yore. I don’t dare go in a Waitrose these days. I’d need to take out a bank loan.

So - inflation being lower than it was before but still plus-something per cent isn’t going to change these prices, unless the supermarkets initiate a proper price war off their own bat. Those old enough to remember when baked beans were being sold for 7p a tin do know that these things can happen, but while the shops have the same cost pressure on electricity and gas prices that we householders do, it’s unlikely.

So let’s hail the fact that prices are not still racing out of control, by all means. Let’s be pleased that this doesn’t make things worse. But don’t labour under the delusion that this morning’s news will instantly make things better. It won’t. I’m afraid most of us are still skint.