We are merely at the end of the beginning of this economic shock
Last week I suggested that the economic data coming out in the next few days could have major effects on both financial markets and the public mood. So it transpired. And, for once, the surprises on both inflation and the public finances were in a favourable direction. Have we now turned a corner?
The financial markets seemed to think so. After the inflation figures were released, expectations for the peak in interest rates, 10-year gilt yields and the pound all fell, and the stock market jumped by almost 2pc on the day.
This was excellent news. But we shouldn’t overdo the rejoicing. In particular, at 7.9pc, inflation is still very high.
It will continue to fall back over the coming months and there is a good chance that the Prime Minister will meet his pledge to halve inflation by the end of the year, requiring it to fall to 5pc or lower.