NEWS that inflation had fallen by a much larger amount than expected, down to three per cent last month, was greeted with consternation by opposition parties that have spent the last 18 months writing off Chancellor Rachel Reeves’ economic policy.

The expectation from the Bank of England is that inflation will drop down further, towards two per cent by April.

Obviously, this does not mean that prices are falling – but they are rising much, much less quickly than the double-digit figures we experienced following the disastrous Liz Truss budget that was so brazenly welcomed by Reform’s self-appointed leader, Nigel Farage.

In a healthy economy, it’s important to have a small amount of inflation but a key metric is the difference between wage inflation and real inflation, as this indicates whether workers’ pay packets are going further and they are ‘feeling’ the benefit. After a long period when real inflation was far outstripping wage inflation, under this Labour Government and thanks to Rachel Reeves’ delicate economic navigation, the outlook is brighter as she steers the economy away from choppy global waters.

Wage inflation is now 3.8 per cent compared with three per cent real inflation and the difference between the two is set to grow. Every time that I have met the Chancellor, what has impressed me most is her iron-clad grasp of macro-economics and her laser focus on the key drivers of economic growth, balanced alongside the urgent need to regenerate public services that were for so long underfunded by the Conservatives.

When the Bank of England next meets, the expectation now is that, like inflation, interest rates will fall again, for the seventh time since Labour came to power. That means mortgages become cheaper. In fact, since Labour came to power the average mortgage cost in Camborne, Redruth and Hayle has fallen by £1,740 since the General Election.

Now, it would be crass to suggest that all is rosy and we’ve already reached safe harbour of economic stability. Youth unemployment is still too high, small businesses are struggling under the strain of increased business rates and employers’ national insurance, business confidence is patchy and in terms of household bills, energy costs are high.

But this is where targeted intervention will be essential: the Youth Guarantee Scheme, launching in April, will ensure that 18 to 21 year olds on Universal Credit for 18 months will receive a six-month paid job, training or apprenticeship; pubs and music venues will benefit from a 15 per cent business rates relief on top of the support announced at the 2025 Budget, as the COVID business rates relief scheme comes to an end; and from April, on top of the Warm Home Discount scheme £150 will be taken off the average heating bill.

This is in addition to freezing rail fares for the first time in 30 years; capping prescription charges to less than £10; increasing the State Pension by 4.8 per cent; and up to 30 hours of government-funded childcare. We have much to do and it will take time for some of these measures to be felt in household finances…but the UK economy has now got safe harbour in sight.