Well that was a surprise. At just 3.9 per cent, down from 4.7 per cent, the latest inflation figure published today came as a shock for many. The figures are far lower than the consensus forecasts, and even low enough to allow the Prime Minister Rishi Sunak to meet his forecast to halve the rate by the end of the year. But should we really be surprised that inflation has fallen so rapidly?

Monetarists – who noticed that the money supply has been contracting since the start of the year – won’t be taken aback by the inflation figures. They said all along that the flow of money is the key to inflation – and they’ve been proven right. Economists who bothered to look at these monetary supply figures, which have been contracting noticeably, have been saying for months that prices would soon stop rising. Indeed, the shadow monetary policy committee, made up of independent economists, has been arguing for a cut in interest rates right away as a result.

The only problem is the Bank of England has consistently ignored them. The Bank’s models no longer take sufficient account of the money supply, either when it is expanding rapidly, or when it is contracting. Indeed, extraordinarily, three of the nine members of the real monetary policy committee voted for a rate rise only last week. If they had won the argument, rates would now be at punishingly high real levels for an economy already on the brink of a recession. As it is, we are still going to be stuck with interest rates of 5.25 per cent, almost certainly too high, for months to come.

The fall in inflation is good news for everyone. With prices under control, interest rates may start to come down soon, easing the pressure on households and businesses. But it also makes it clear that the Bank badly blundered all over again, leaving rates too low for too long, then raising them too high. Its economic models are completely broken, and the people in charge are too arrogant to admit that and to reform them. Until that changes, the Bank will keep on making mistakes.

Monetarists are probably the most ignored group of economists in the world. They are widely dismissed as Thatcherite relics with little understanding of the complexities of the modern world. But they called this one completely right – it is just a shame the Bank of England didn’t listen to them.