Bank's failures so great it's a wonder Bailey still has a job

THE PAST few years T have been so full of gloom, in so many guises, that it takes some adjusting when there comes a piece of all round good news. Yesterday's inflation figures are that news.

- Ross Clark

Not only did they show that the Consumer Prices Index has fallen to 3.9 percent, down from 4.7 percent last month but the drop exceeded market expectations by some margin.

A year ago, average earnings of UK workers in real terms adjusted for inflation - were falling dramatically. Now it is the other way around. Average earnings are up more than seven percent over the past year, meaning the average UK worker has enjoyed an effective pay rise of three percent.

Of course, not everyone will be feeling well off, and real-term pay rises are really just making up for last year's real terms fall. It is far from boom time. Mortgage rates, in particular, are continuing to eat into household budgets, as well as steep rent rises.

But the danger of a 1970sstyle inflationary spiral is receding by the day. It is now looking more likely that the Bank of England will be confident to lower interest rates at some point next year, possibly several times. Look around the world, too, and it is a similar story. If the beast of inflation has not quite been slain then it is certainly cowering deep inside a cave. In the US, inflation is down to 3.1 percent.