Here's an interesting fact for you one I imagine you may not be aware of. Average Retail Price Index (RPI) inflation between 1947 and the modern era, right up until 2011, is 5.6 percent.
That's exactly what RPI is today: 5.6 percent - average. And no, I haven't just picked that number out of thin air. I checked it with an economist Peter Dixon, economist at Commerzbank in fact.
So why the fuss? Why the panic? Where are the burning buildings? Oh, you're worried about Consumer Price Index inflation. Really?
It shouldn't come as a surprise that CPI inflation is creeping up toward the same level as RPI. CPI calculates the rate of inflation on a range of goods and services -- usually about 600 or so - but doesn't include mortgage interest payments and council tax.
As a result, in the past, RPI was always significantly higher. But with interest rates at historic low levels -- and unlikely to increase any time soon -- house prices stuck like a needle on a broken record and council tax frozen for this year and next by the coalition government, the difference between the two was always going to narrow.
Moreover, the CPI measure of inflation has often been considered as a less reliable measure of inflation since its introduction in 1989. The basket of goods and services used by the Office of National Statistics (ONS) will change to reflect changes in buying habits in society, so rose wine was added to the basket in 2009 replacing bottled cider. The problem here is that as people feel the squeeze on their incomes over time they'll go back to the bottles of cider - thus bringing the rate of CPI inflation down again. It's a crude example I admit but so is the CPI measure of inflation.
The reasons for higher - although still comparatively moderate - inflation are not complex.
Commodity prices have increased fairly dramatically over the last few years thanks to growing demand from emerging markets - it was once considered a shock for oil to hit $100 a barrel; now we would look at that as cheap. Rising commodity prices put pressure on fuel, energy prices and food prices, the three chief contributors to inflation in the UK at the moment -- although it doesn't help that the energy companies in the UK are pushing up prices well ahead of their own costs and making a £125 profit per household.
Meanwhile, investors are hoarding cash because the global stock markets are a mess and banks around the world aren't willing to lend to each other let alone other businesses.
All of which has led to central banks pumping money into national economies, devaluing their currencies in an effort to increase liquidity, because the banks won't lend a penny to anyone.
But that doesn't mean we have to hit the panic button.
Most people who have a mortgage are doing very nicely, thank you very much, out of lower interest rates. I know people who were afraid of losing their homes two years ago because they would not be able to keep up with their mortgage payments and who, because the Bank of England lowered rates to 0.5 percent, are now lowering their overall mortgage debt more quickly than they ever thought possible.
While those who want to see rates increased always argue that we must keep inflation under control, it's far from rampant. Savers - and what we are really talking about here are those who hold private pensions -- may well be suffering, but that's got far more to do with equity market volatility than it has inflation. Those who talk in terms of the cautious being forced to pay for the profligate have their heads in the clouds. Every single individual took advantage of the easy credit of the last decade, every single resident of the UK. It's the argument of the selfish rich to blame every one else for eroding their "hard-earned" savings.
Those on the basic state pension -- and when we talk about pensioners most people are still on the basic state pension -- will see it increase in real terms as a result of Tuesday 's inflation figures, as will those in receipt of other welfare benefits. I suspect they will be quite pleased. And f the government really wanted to address the concerns of pensioners, maybe it should think about reversing the £100 cut in the winter fuel allowance, which is nothing more than an attack on the elderly when energy prices are going through the roof.
Also inflation is a great tool to pay off government debt. Just ask Joshua Aizemann, professor of economics at the University of California, Santa Cruz, and research associate at the US National Bureau of Economic Research, and Nancy Marion, the George J Records professor of economics at Dartmouth College.
Both argued in 2009 that: "As the US debt-to-GDP ratio rises towards 100 percent, policymakers will be tempted to inflate away the debt....US inflation of 6 percent for four years would reduce the debt-to-GDP ratio by 20 percent, a scenario similar to what happened following World War II."
So if it's possible for the U.S., why not the UK? While the UK government's benefits bill is set to rise by £1.8 billion thanks to the latest inflation figures, the positive effect of that inflation on the UK's debt bill far outweighs this figure -- a £1.8 billion rise in pensions and other benefits payments is a drop in the ocean in terms of government spending. And the UK's debt-to-GDP ratio is 61 percent!
Added to this is the ridiculously low level of interest the UK government is currently paying on any money it wants to borrow. UK government bonds now yield at around 2.25 percent - they haven't been that low since the 1890s, as Chancellor George Osborne so cheerfully bragged in the House of Commons in August.
So here's the problem. This is what the Bank of England is really worried about: deflation. Not disinflation, but deflation created by a lack of economic activity. With £325 billion of extra cash pumped into the economy, the lack of economic activity is the real worry because it will feed into prices.
The concern the Bank of England really has is that without measures from the government designed to encourage economic growth, the economy will go into a tailspin, leading businesses to lower their prices in a fight for survival because UK consumers aren't spending. As we go into Christmas this will become one of the key battlegrounds. I'd strongly suggest watching for retailers to bring forward Christmas sales in an effort to entice consumers out to spend on big tickets items. Some will launch sales before Christmas has even happened as they did last year.
So increase interest rates, as the hawks argue, and the whole economy could come crashing down around our ears. It's not just mortgage rate increases that could lead to thousands struggling to keep a roof over their heads but, as David Hudson, restructuring and recovery partner at accountancy and tax specialist Baker Tilly puts it: "businesses will find themselves caught in the crossfire between inflation and interest rate rises, neither of which they can duck."
"While some businesses that have survived so far are tough and in good shape to move forward, many are just hanging on, relying on interest-only arrangements or Time-to-Pay agreements. Rises in interest rates will particularly impact these companies, forcing them over the edge."
That's also what the coalition government's opponents are talking about when they say it has no strategy for growth, and why the coalition's continuing refusal to borrow more to spend its way out of the current economic crisis - as has even now been advised by the International Monetary Fund in the last few weeks -- just looks pig-headed and entirely ideologically driven.
It's also why people are camping just outside the London Stock Exchange. They don't' see their government taking any steps to resolve the crisis.
So while I'll spare a thought for the savers, it's the rest of us that I'm more worried about. And as for the interest rate hawks, you didn't know what you were talking about last year when you started calling for interest rate rises, and you still don't.
If you're lucky enough to have any money to save, get an Instant Savings Account. They're tax-free and some of them are offering pretty competitive rates. If you've got a private pension and are just annoyed that your annuity isn't going to be so great this year, well to be honest, you had the best years out of the post war era, and those of us that come after you are going to be footing the bill until we're at least 67. I don't have much sympathy.
Follow Matthew West on Twitter: www.twitter.com/http://twitter.