Expectations of inflation, and recent waves of price rises, could be self-fulfilling and fuel ‘greedflation’ – and it may not only apply to US consumers

Over the past few years consumers have grown used to seeing prices rise at an exorbitant rate. The cost of everything – from used cars to utility bills and the humble loaf of bread – has rocketed in the worst inflation shock across advanced economies since the 1980s.

While inflation has cooled in the past year, talk of fast-rising prices is back on the agenda from Donald Trump’s escalating trade war.

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Economists say chancellor could be forced to raise taxes or announce deeper spending cuts later this year; stocks, dollar, oil prices rise on hopes of US-China trade deal

• UK annual borrowing exceeds forecasts by almost £15bn

The collapse in confidence and drop in output during April raise red flags for the economic outlook and add pressure on the Bank of England to reduce interest rates again at its May meeting, said Chris Williamson, chief business economist at S&P Global Market Intelligence.

While recent months have been characterised by UK businesses treading water, broadly stagnating since last autumn’s budget, businesses are reporting more of a struggle to keep their heads above water in April.

April’s fall in output was the largest recorded for nearly two and a half years, consistent with GDP declining at a quarterly rate of 0.3%, reflecting falling activity and demand across both manufacturing and services.

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