A deeper dive into this morning's inflation and borrowing data... 🤔 (TL;DR - time to dust off those Oasis puns, and for a 'Ming Vase Budget'?) The main driver of the jump in inflation to 3.5% in September was higher fuel prices, as expected, but core inflation excluding food and energy was also up, from 2.6% to 2.8%. This was led by services, especially 'recreation and culture'. The latter may partly reflect the unwinding of the distortions created by the Oasis reunion gigs in 2025, as well as the expiry of this summer’s temporary VAT cut for family tickets. The only good news is that food inflation held at 1.3%, thanks to intense competition in the supermarket sector, but this relief is unlikely to last. Real wages are falling again – at least outside the public sector - while many households also face higher borrowing costs. Moreover, inflation is set to rise further as higher energy prices and other cost increases feed through to the consumer. Inflation control is primarily the job of the Bank of England, which has been slow to respond. But successive governments have also made this job harder by adding to the cost burdens on businesses and by preventing markets from working properly. The current government has doubled down on these mistakes with further clumsy interventions in the markets for labour, energy, and housing. The fallout from the ‘Renters Rights Act’ is just the latest example, adding to the upward pressure on inflation as private landlords either sell up or increase rents further while they still can. Meanwhile, the run of bad news on the public finances continues. Borrowing was about £2 billion above the OBR forecast in September, mainly due to higher interest costs, and debt was provisionally estimated to have exceeded £3 trillion for the first time. A burst of deficit-financed public investment might have made sense in the early 2010s when government debt and interest rates were both relatively low, but that moment is long past. Next week’s fiscal event will have to be a ‘Ming Vase Budget’, given the fragility of the public finances and of confidence in the economy more widely.