Inflation is a tricky concept. Beyond consumer price inflation, markets look at producer prices and “core” inflation, which excludes volatile factors such as fuel. In the US, the “headline” rate of inflation, is 2 per cent, the core is 2.6 per cent, and producer price inflation is 2 per cent.

What about Christmas? It seems to get dearer every year. According to the PNC Christmas Price Index, kept by PNC Wealth Management, a Philadelphia fund manager, this is no illusion. The cost of “The Twelve Days of Christmas” has been $18,920 in 2006, a 3.1 per cent increase over last year and the highest in the 22 years PNC has kept the index. It is inflating faster than the economy.