Inflation was expected to tick upwards to 3.1pc today, but in the event it held steady at 3.0pc, with lower fuel costs offsetting higher food prices. This narrowly averts the need for Bank governor Mark Carney to write an explanatory letter to the Chancellor. Contributor Ben Brettell, Senior Economist, Hargreaves Lansdown.

In any case, it would have been an easy letter to write. The spike in inflation should be temporary, as the effect of the weaker pound filters through to prices. And the Bank has already responded, with Carney and colleagues raising interest rates last month.

In truth this small increase in borrowing costs probably won’t do much to dampen inflation. But it should fall back regardless as the currency effect drops out of the figures. We’re already seeing slower rises in the costs of raw materials and prices at the factory gate, which could be a sign the inflationary spike is close to an end.

That said it looks like it will be a slow decline from here. The Bank’s chief economist Andy Haldane said this week he expects above-target inflation to persist for ‘the next few years’.

That’s not good news for living standards – or savers. Wage growth is being held back by weak productivity, meaning real pay is still shrinking. We’ve been waiting for this to filter through to the high street, and it looks like that could happen just in time for the crucial Christmas period. The British Retail Consortium painted a gloomy picture last week when it reported a 1pc year-on-year drop in like-for-like sales. Retailers’ woes are expected to be confirmed by official numbers from the ONS on Thursday.

Some of that’s due to the unseasonably warm weather holding back clothing sales, but it nevertheless puts retailers on the back foot as we move towards Black Friday and the Christmas trading period that lies beyond.

None of this makes Philip Hammond’s job any easier as he puts the finishing touches to what could be a tricky balancing act in his Budget next week. The OBR is expected to downgrade its economic forecasts, which of course means less projected tax revenue and less money to spend. He’ll also be wary of raising taxes after his proposed increase in National Insurance for the self-employed was shot down in flames earlier this year. So despite calls for a ‘big and bold’ Budget, in truth spreadsheet Phil has little room to manoeuvre.