Stubborn inflation and low growth mean only one thing - stagflation

So there you have it. The fall in the rate of UK price inflation last month was nothing but a blip.

The Consumer Price Index (CPI) is now back up at 4.4%, and the Retail Price Index (still the one most people measure their lives by) remains at 5%.

That's rubbish for savers. If you are a 20% taxpayer you need an account paying 5.5% to make a real return based on the CPI. If you are a 40%-tax payer you need 7.3%.

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Mostly you can't get either. There are eight accounts that pay the 5.5% rate but they are all fixed-rate Isas ie you can protect only £5,340 in them. There aren't any non-Isa accounts that suit.

Moneybox's Paul Lewis was at pains to remind me today that anyone can buy the NS&I index-linked saving bond - and he is quite right. But while it beats inflation, you can only put £15,000 in it. The upshot? There is no account for 20%, 40% or 50%-tax payers that will take a significant amount of money and let a saver make a real return on it.

Inflation is slowly and not even that slowly destroying the value of the nation's savings. That's worth remembering at the moment if you are suffering from empty wallet syndrome and wondering exactly who to blame.

As Capital Economics points out, it is often assumed at the moment that the weakness of consumer spending and rising financial pain being felt by the average family (30% of even high-income earners now rely on their overdraft to get through every month) is something to do with austerity. But it just isn't.

The rise in VAT hasn't exactly helped, nor has the small fall in public sector employment. But the truth is that the fall in real incomes started a good few years ago. They have fallen 2% since last June, but 8.5% since early 2008.

And you can place the blame for that pretty squarely on commodity prices. On Capital's numbers, higher petrol prices have cost us an extra £13bn since 2007; utility price rises have cost £13bn (with more to come); and food price rises around £25bn.

We're all beginning to get used to seeing inflation knocking around 4-5% - just as we are getting used to the base rate being 0.5%. Household inflation expectations are now hovering around 4% rather than 2%.

But we shouldn't let ourselves forget that inflation at 5% is very high inflation. It is hitting our spending power very hard indeed. And it is likely to continue to do so.

Most experts expect to see gas and electricity tariffs rising for the next three years or so; global food stocks remain relatively low; import price inflation is still high; and, given the deficit, there is every reason to think that more indirect taxes of one sort or another are on the way.

Add that to low growth (although Germany's 0.1% makes our 0.2% look rather better than it did) and it is hard to see anything but stagflation ahead.