But dig deeper and you will find some interesting undercurrents. Not all are cheering but they add up to an interesting scenario for the medium term.
Last year, local authorities were faced with committing tons of recyclable material to landfill. The market had dried up. You couldn’t give the stuff away. Then suddenly demand from China picked up – big time. In February, the price paid for recycled paper leapt. Packaging material is back on the agenda.
Then, while I was away, the new Argos catalogue was issued. With over 18,000 items, it provides a snapshot of consumer goods’ pricing. Prices are going up – in some cases by as much as 40 per cent.
Why? Well, the weakness of sterling is not helping. And it is clear that the imported disinflation from the Far East is now well and truly over. Demand may be faltering and commodity prices depressed but goods are costing more.
So there was little surprise for me in the inflation figures that came out last week. True, the cost of living has fallen, but not by as much as expected. We know petrol is down and the surge in food prices has moderated but, with the pound heading south, it would be foolish to believe that the economic downturn will immediately translate into a slide in inflation.
In the past, I have remarked that a low interest rate environment is a two-edged sword. Borrowers may be helped but savers are left with a reduced income. The problem today is that the collapse of interest rates to near zero is damaging the ability of pensioners in particular to spend, but is achieving little of consequence for the indebted among us. And all this against a background of rising prices. It does not bear thinking about.
Governments may be concerned to head off the worst effects of the recession, but the price of printing money – the universally adopted approach – is the rekindling of inflation.
Let out of its cage, inflation is a hard beast to tame. With cash yielding next to nothing, government bonds on sub-4 per cent returns, yet equities and corporate bonds providing an income of 5 per cent or more, I detect the potential for a fundamental shift in relative valuations.
Who knows when this might happen? We have much pain and uncertainty ahead as we unwind past excesses. Markets will turn ahead of economies for sure but we are in unchartered waters and it is a brave man who says the last of the icebergs has floated past. After all, who would have thought West Indian cricket’s saviour would turn out to be a stablemate of Bernie Madoff? Console yourself with the thought that retailers can provide the product for the times. Aldi offers a dressed lobster for £4.99 – just the ticket for the straitened middle classes.
Brian Tora (email@example.com) is principal of the Tora Partnership