An economic downturn means the next government will have no excuses

It has fallen to 2% in the latest figures from a peak of 11.1% in October 2022.

I reckon this rate is likely to drop further to 1.5pc in the next few months.

That’s not to say inflationary risk won’t loom ahead.

Wage inflation has slowed and under a Labor government, unions’ position with workers’ rights will be strengthened.

There could be even bigger increases in both the National Minimum Wage and the National Living Wage.

So it is not beyond the realm of possibility that inflation will re-emerge at some point and require an additional dose of the drug to suppress it again.

But for now at least the drop in inflation is bringing a big boost to personal finances.

Real personal disposable income is likely to grow by around 3 percent this year and next.

Unsurprisingly, this progress leads to increased consumer spending.

Even if official interest rates do not rise further this year, the previous round of rising interest rates is a drag on household spending.

This drag has now reached its peak.

A favorable short-term picture of inflation should allow interest rates to drop slightly, with the first cut likely to come in August.

Against this backdrop, consumers are cautious and savings rates have risen significantly. That may change now.

As people are more confident, they are likely to increase their spending in line with their income.

I reckon consumer spending could increase by around 1pc this year and rise to 2pc next year and 2026.