“With inflation still stubbornly low – and still so far short of the Bank of England’s 2% target – it is tempting to view the inevitable prospect of a rise as an irrelevance.
“But with wage growth all but static, even small increases in the cost of living would have a disproportionately negative effect on consumers’ spending power.
“With oil prices beginning to recover and the weak Pound already driving up the cost of imports, it’s increasingly likely that inflation will start to tick upwards in coming months.
“Add in the return of food price inflation, and the danger becomes clear. If wages fail to keep pace with the cost of living, Britons’ disposable incomes will shrink and the spending spree driving the economic recovery could be stopped in its tracks.
“Inflation at 2% remains the Bank of England’s target, but reaching it prematurely could have painful implications both for workers and the economy as a whole.
“For now, the glacial pace of wage growth remains an economic curiosity. But when inflation starts to rise it could become a serious economic danger.”
