Like everyone else it seems, the Bank of England is really worried about inflation. There is no denying its seriousness, especially for low-income households, which the UK has generated an abundance of over the last 40 years.

But is the supposed cure, a stiff set of interest rate rises, worse than the disease?

The logic behind rate rises is that making the credit of the nations’ poor more, while they are already struggling with food and fuel bills, will make them in the long run better off.

If that sounds absurd, it’s because it is. What makes it slightly less absurd is the rider that if we don’t do this people’s expectations about inflation will become ‘unhinged,’ and they will ask for wage increases to compensate for their inflation losses.

And if they do that, we will end up with higher and higher inflation, which will make them even worse off. Onward, upwards, to hyperinflation and beyond! So to avoid that we need to make a sufficient number of them unemployed (hard landing) or just a bit poorer (soft landing).

For this story to be plausible, inflation must be, not just as Friedman had it, always and everywhere a monetary phenomenon. It must be always and everywhere be an acceleration prone ever-present danger. But is that the case?

Historic data on inflation in the UK from the Bank of England, which stretches all the way back to 1210, shows that periods of high inflation are more often than not followed by periods of falling – not rising – prices. Historically deflation has been normal. Inflation is not.

Of the 807 years of data in the series 340 of them experienced deflation, that is falling prices with the largest being -31% in 1558, the year Elizabeth 1st came to the throne.

The Black Death, 1346-1352, saw inflation averaging 18% from 1350-1352. The year without a summer of 1816 after the eruption of Mt Tambora, which resulted in major food shortages and death, was followed by five years of deflation from 1820-1824.

Inflation averaged 17% from 1915-1920, and there was deflation in every year from 1921-1933.

In 2009 it averaged -0.5% and eight of the twelve months were negative. The CPI (consumer price index) had three negative months and four zeroes in 2015 and averaged zero for the year. The Eurozone as a whole was in deflation from 2013-2016.

Putting it in context, inflation in the UK in the most recent data release was 11.8% for June 2022 according to the RPI (retail price index) and 9.4% on the CPI. It is expected to get higher before it turns downwards.

The question then is where will inflation go? Up to a permanently higher plateau seems historically extremely unlikely. To the contrary, it does seem that a lot of prices around the world are tumbling, including oil, food, timber, fertiliser, computer chips and second-hand car prices along with the cost of shipping freight.

The Baltic Dry, which is the cost of shipping dry goods around the world, has fallen sharply. Grain shipments have started from Ukraine, with the first ship getting through to Turkey this week, with prices reflecting that fact.

Given all this, if history is anything to go by, we are likely to be in for a period of deflation rather than higher and higher inflation, which is much more likely than an era of middle single digit inflation as some have suggested.

If we look back to the summer of 2008 when the MPC (Monetary Policy Committee) at the Bank of England was worrying about inflation exploding the RPI was 5.0% in September 2008, around the time Lehman Brothers and RBS failed, it was -1.4% a year later.

In short, central bankers have overcooked their response to the burst in inflation which was caused by supply shocks from the pandemic followed by war in Ukraine. They raised rates and told the markets there were lots more increases coming, so financial markets tightened.

This has created a deep recession in the UK and elsewhere. Business and consumer confidence has collapsed, which is more predictive of bad things to come than a forward projection of inflation rates. If we are right and deflation is the danger we will shortly face, then the concern is that central banks will have no effective response since they can’t cut rates from 5% to zero.

The latest forecast of inflation by the MPC shows there is some prospect of deflation from the middle of 2024. There is every prospect this could happen sooner than that.

Compounding this the UK will have a new Prime Minister and no Chancellor in place, and from what we have heard so far, whoever is in place hasn’t the faintest clue on how to dampen a recession when rate rises are the only topic of discussion. In such circumstances the foreign exchange market is likely to have a field day as speculators short the pound.

Professor Danny Blanchflower is Bruce V Rauner professor of economics at Dartmouth College and University of Glasgow, and a former member of the Bank of England MPC Committee.

Mark Blyth is William R Rhodes professor of international economics  at Brown University