Growth comes at a price

A left-of-centre economist in the United States has a certain disdain for what he calls “up and down economics”, but for those forced to live in the real world that phenomenon doesn’t exist.

Most prices, measured by the rate of inflation, have a nasty tendency of rising, all up and no down, so to speak. In this country, the inflation rate has been running at well over twice the EU rate and only in recent months has the gap begun to close in earnest. Inflation in November 2002 stood at 4.8% against an annual inflation rate of 2.2% for the year to end November 2003. That’s quite a reversal of fortunes and the chances are that by the end of December the rate will be close to 2%.

Several factors are at play here including a rise in the euro against the dollar and the economic slowdown, which has taken some of the heat out of consumer demand over the past 18 months.