The most important economic indicator this autumn is an old friend, reappearing like a toothache you’d forgotten about. It’s inflation.

The retail price index, viewed as the standard measure of UK inflation, has been running at 5 per cent since January. This is unfamiliar territory. Not once between 1991 and April 2010 did it hit 5 per cent. 

Price inflation is an immediate concern for NHS finance directors and boards. The 2011-12 operating framework allows just 2.5 per cent for inflation in the current year. So where is the balance to be found? 

The inflation figure sets the context for what’s looking like a bitter autumn, with even the British Medical Association contemplating industrial action. If the issue is pensions, it is underlying inflation that is stoking staff concerns.

Investing a pension lump sum? You’ll do well to earn 2 per cent per year. But with inflation at 5 per cent, you’re always a loser. In a decade your investment will have lost a third of its value.

Ah, but your pension income is inflation-proofed, isn’t it? Sadly, no longer. Government now uses the consumer price index for pension indexation, and the CPI estimates inflation to be just 4.4 per cent. (The index uses a different technique that means it will almost always be lower.) 

For something else has insidiously changed. Traditional wisdom regards inflation as bad, stable currency as a government priority, and simply printing more money as the height of folly. But for a coalition intent on trimming the public sector, freezing funding and letting inflation eat away at its value, it has its attractions. For a government wanting people to work longer, letting inflation gnaw at pensions may be equally tempting.