Cost of living: Why new path for inflation could mean UK avoids a deep recession

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It may still be as near as you can get to double figures.

It may yet be heading higher still. It may be squeezing households across the country, but squint a little bit and there’s some good news in Wednesday’s inflation data.

For the first time in a long time, not only did the rate at which prices are rising (which is what inflation ultimately is) fall between July and August (from 10.1% to 9.9%); it fell by more than economists had expected (they anticipated 10% on the button).

There’s no point in overdoing this, but given pretty much every month for the past year, inflation has come in higher than expected, it’s worth noting when the opposite occurs.

You can sum up the explanation for why inflation fell in two words: petrol prices.

The cost of filling up your car with unleaded fell sharply (from admittedly record levels) in August. That alone was responsible for 0.4 percentage points of the fall. Or, to put it another way, were it not for falling transport costs, the inflation rate would risen rather than falling.

And that’s something worth dwelling on, for when you strip out the volatile components of the inflation “shopping basket”, “core” inflation, as it’s sometimes called, is still on the rise, up to the highest level in decades.

An alternative measure of underlying inflation compiled by the National Institute of Economic and Social Research rose from 7.2% to 7.8% in August.

And even the most optimistic economists expect inflation to rise again in the coming months.

Liz Truss’s energy price guarantee will not prevent another hefty rise in bills in October, even if it prevents them thereafter.