There is an obvious culprit for our alarmingly sticky inflation

Insofar as the incoming Labour administration had a strategy for the economy – and let’s be honest here, you needed a very powerful microscope to detect much sign of one – it depended crucially on prices stabilising, paving the way for the Bank of England to reduce the cost of money.

Were this to have happened, interest rates would be falling rapidly, reducing the cost of servicing government debt, cutting mortgage rates and boosting consumer spending and corporate investment.

The trouble is, Wednesday’s worse-than-expected inflation data has punctured that. Prices are still not under control, leaving Labour’s plans in tatters.

Interest rates came down in the eurozone last week and the Federal Reserve was expected to cut its rate as well on Wednesday. We would have expected the Bank of England to follow those moves when it announces its latest rates decision at lunchtime on Thursday, taking rates down to 4.75pc or perhaps even lower. After all, with inflation falling around the world, everyone would expect the UK to follow suit.

Unfortunately, that’s not the case.

The inflation data for this month, which had been expected by some to show another significant fall, taking it below the Bank’s target 2pc rate, remains stuck at 2.2pc. In the US, the rate fell from 2.9pc to 2.5pc this month, while in the eurozone it dropped from 2.6pc to 2.2pc.

The UK is bucking the trend in other major, developed economies. Sure, the Bank may press ahead with a rate cut this month. But a sustained series of rate cuts now looks very unlikely, at least until there is clearer evidence that inflation is still falling and will remain consistently below the 2pc target.

The chances are that rates will stay at current levels at least until the Budget next month and perhaps until the end of this year. This means that Chancellor Rachel Reeves faces an even tougher task in balancing the books.

The Government is already paying £102bn a year servicing all the debt it owes. With lower interest rates, Treasury officials could have pencilled in £20bn to £30bn less in interest, but they will have to put a red line through all of that.

Wage demands will be higher, especially in the public sector. The cost of everything the Government buys will go up more than expected and welfare payments will be higher than might have been anticipated.

Worst of all, the “horror Budget” next month, with a raft of punishing tax rises, combined with interest rates that remain higher in the rest of the world, will destroy what little confidence remains among both businesses and consumers.

The tax rises will no longer be offset by lower interest rates; they will just take even more money out of everyone’s pocket. The economy has already stalled since Labour took office, it could soon be teetering close to a full-scale recession.

Much as it will attempt to blame 14 years of Conservative governments, Labour only has itself to blame for the mess. Rishi Sunak and Jeremy Hunt’s management of the economy had plenty of flaws – not least the destructive rise in corporation tax. But the Tories do have one saving grace: both men kept tight control of the public finances and drove inflation down.

By contrast, Reeves and her colleagues complacently assumed that all the hard work had already been done. Since taking office, this Government has recklessly caved in to the public sector unions, conceding wage demands that will feed through into the private sector, increasing employment costs that will have to be passed on to the consumer.

Its net zero targets are driving up energy costs, with another 10pc rise in bills scheduled for later this year, which will soon be contributing to the inflation data. Its latest frontier in the war on landlords will drive up the cost of renting. It is beefing up employment rights, forgetting that if a small company has to hire an extra person because the rest of the team have a right to switch off, the money has to come from somewhere. The list goes on and on.

It is no accident that the biggest overshoot in inflation last month, as well as air fares, was in the service sector, where wages are by far the largest cost. Labour may believe that it is just offering workers a fairer deal – and that may even be justified to some degree – but it has ignored the impact its policies will have on wages and in turn on prices.

Meanwhile the constant warnings of tax rises and the relentless negativity of the Starmer administration has shredded whatever boost to business confidence a new government with a huge majority might expect to enjoy.

Labour kept boasting about the increase in investment that would result from stability once they took power but there is not much sign of it actually happening. We can forget about any improvement in the supply side of the economy putting any downward pressure on prices.

Add it all up and one point is surely clear. If inflation does not start to fall again – and quickly – then Labour’s economic plans are already in tatters. All it will be offering is a doom loop of Italian-style permanent stagnation coupled with endlessly rising taxes to fund a state machine that barely functions anymore.

That will become apparent over the next few months – and the Chancellor and her colleagues in the cabinet will only have themselves to blame.