There is still an expensive war to fight, and if EU and UK politicians insist on using taxpayer funds for it, there will be little left to spend on public services

There were hopes that 2024 would be a good year. Economists talked of a soft landing, by which they meant a solid rebound from last year’s high-inflation, high-interest shock. A drop in inflation would spark cuts to the cost of borrowing while trade expanded, unemployment stayed low, and household disposable incomes increased.

This cheerful scenario was going to be played out across Europe and allow the EU and UK to pursue many of the goals, not least tackling climate change, that were delayed as ministers sought to protect business and household finances from the fallout from the pandemic and the Ukraine war.

Central banks may not aim for such an outcome but will probably adjust interest rate decisions in a way that makes it more likely than deep recession

Listening to central bankers, one would think that the recent bout of high inflation was merely an excusable post-pandemic forecasting error made under extreme uncertainty. But while this narrative now prevails in markets and the financial press, it presumes a level of central-bank independence that is simply unrealistic in today’s volatile economic and political environment. And even if central banks manage to get inflation back down to 2% in the foreseeable future, the likelihood of another inflationary surge within the next five to seven years has significantly increased.

This is not to say that individual central bankers are untrustworthy. The problem is that most central banks are not as independent as many believe. In a global environment marked by political polarisation, onerous government debt burdens, geopolitical tensions, and deglobalisation, central-bank autonomy cannot be absolute. As unelected technocrats, central bankers may have short-term operational independence but governments ultimately control appointments and oversee budgets. In many countries, the government also has the power to reset monetary mandates.

Sticking to the Tories’ nonsensical fiscal rules, as it says it will, would be a political and economic mistake

Labour knows what it is like to inherit an economic mess. It did so in 1974, when Britain was on the verge of a period of high inflation and rising unemployment. It did so in the even tougher circumstances of 1945, and it will do so again if it wins on 4 July.

Things are not as bleak as they were when the second world war ended, but coping with the twin shocks of the past five years – a pandemic and a European war – has been a struggle. Repairing the damage will be costly and time consuming.

Larry Elliott is the Guardian’s economics editor

Nigeria has played a major role in fostering democracy in Africa’s west but after 25 years its people are losing faith

For visitors to Lagos, the gentle plea begins with immigration officials at the airport and is echoed across the streets of Africa’s most populous city: “Show me love.”

It is a familiar request for tips in a city of omnipresent hustle, but residents say the requests have intensified in the last year as people struggle under the crushing weight of Nigeria’s underperforming economy.

CBI data for May suggests slowdown in price growth is encouraging shoppers in Britain to buy more

Sales in British shops have bounced back in May, according to retail data that suggests slowing inflation is encouraging customers to buy more.

A net balance of +8% of retailers told a Confederation of British Industry (CBI) survey that sales volumes were up this month compared with the same period a year earlier – a sharp improvement on the -44% year-on-year figure for April. The balance is the difference between companies who answered that the number of items was “up” or “down”.

From unemployment to inflation, the key data the Tories and Labour must explain to voters

Rishi Sunak’s slim chance of pulling off a victory against the odds in July’s general election depends on voters buying the argument that tough decisions taken since he became prime minister are paying off.

That claim will be tested over the next six weeks – with every piece of economic news more closely scrutinised than usual for evidence that the UK’s tentative economic recovery is gaining momentum or has started to falter.

Economies decide elections but with growth tentative, inflation sticky, and tax cuts unlikely, why would the PM wait

• UK general election – latest updates
• News: Sunak calls election for 4 July
• Why is Sunak calling an election now?

When you are 20 or so points behind in the opinion polls calling an election before you need to do so is a high-risk strategy. Yet Rishi Sunak has decided that holding on until the autumn is an even bigger gamble. The economy decides elections, and as far as the prime minister is concerned, this could be as good as it gets.

Sunak has only come to this view recently. After sliding into a shallow recession at the end of 2023, the economy has only just returned to growth. Living standards – which took a hammering during the cost of living crisis – have been picking up. Inflation has fallen from a high of 11.1% in October 2022 to 2.3%, only just above its target.

Exclusive Harris poll for the Guardian shows 55% believe economy is shrinking, in troubling sign for president’s re-election bid

• Do you know how US economy is actually doing? Try our interactive quiz

Nearly three in five Americans wrongly believe the US is in an economic recession, and the majority blame the Biden administration, according to a Harris poll conducted exclusively for the Guardian. The survey found persistent pessimism about the economy as election day draws closer.

The poll highlighted many misconceptions people have about the economy, including:

55% believe the economy is shrinking, and 56% think the US is experiencing a recession, though the broadest measure of the economy, gross domestic product (GDP), has been growing.

49% believe the S&P 500 stock market index is down for the year, though the index went up about 24% in 2023 and is up more than 12% this year.

49% believe that unemployment is at a 50-year high, though the unemployment rate has been under 4%, a near 50-year low.

Drop in April is smaller than forecast but level is still lowest in almost three years

• Big drop in UK inflation disguises more disappointing details
• Which goods and services have changed most in price?
• Business live – latest updates

UK inflation fell to 2.3% in April – its lowest level for almost three years – but the decline was smaller than expected, denting hopes of an early interest rate cut.

City analysts had forecast the annual increase in the cost of goods and services would fall to 2.1%, close to the Bank of England’s 2% target.

Services inflation higher than expected; electricity and gas prices in record 27% drop, food price rises lowest since 2021

Financial markets have scaled back their expectations for an interest rate cut in June, and August is also looking slightly less likely. They are forecasting a reduction by September, though.

Before today’s inflation data, which showed services inflation is more stubborn than expected, markets had fully priced in two rate cuts this year, one by August and another one before the end of the year. Investors are now split on whether there will be a second reduction.

The cost-of-living crisis is not over - no matter how much ministers pretend it is. Prices are still going up. Food and energy bills are much higher than a couple of years ago. And many are being hit by soaring mortgage repayments.

That’s because household budgets have been decimated by the highest price rises in the G7 and wages have flatlined over the last 14 years.

Pay packets are still worth less today than in 2008, with working people on course to end this Parliament poorer than at the start.

Service sector inflation, monitored closely by Bank of England, barely budged in April

• UK inflation falls by less than expected to 2.3%
• Business live – latest updates

The annual inflation rate fell sharply in April. Prices are rising more slowly than at any time in almost three years. Inflation is lower in the UK than it is in the EU.

Even so, the latest bulletin on the cost of living from the Office for National Statistics was mildly disappointing. April’s inflation figure was always going to be good, with a sharp fall guaranteed by the fact the energy price increases of a year earlier were not repeated.

With prices forecast to increase at their slowest pace since 2021, we look at the biggest risers in goods and services

After three long years of feeling the pinch, UK consumers finally look likely to get some relief from surging prices on Wednesday, when the Office for National Statistics releases its inflation figures for April. The data is widely expected to show that prices are rising at the lowest rate since summer 2021.

Inflation of about 2% is significant for economists, marking a long-awaited snap back towards the Bank of England’s target. It still means prices are rising for the consumer, but not as steeply as they have been. The last few years of inflation have been the sharpest within at least 40 years, jumping the equivalent of 11 years of normal 2% inflation within just three years, a total rise of 22%. At the same time, real wages are down by 2.3% since early 2021, making it harder for most people to afford their energy bills and the weekly shop.

Euro 2024 men’s football tournament and Olympic Games could drive summer sales, says analyst

• Business live – latest updates

Grocery price inflation in Great Britain has slowed to the lowest level since 2021, while households are still trading down to cheaper products after two and a half years of rapidly rising prices, research has shown.

While pressures remain on household budgets, sales of burgers, beer and wine jumped during the bank holiday weekend at the start of May, according to the retail researchers Kantar. It found grocery price inflation had fallen for the 15th month in a row, to 2.4%, the lowest rate since October 2021 and down from 3.2% in April.

After outrage in the UK about the skyrocketing cost of a scoop, how does the rest of the world compare?

The cost of two ice-cream cones topped with bubble gum has famously risen to £9 in some parts of the UK. With inflation rampant in several countries around the world, is the price of cooling down on a hot day creeping up globally?

Ben Broadbent says direct impact of Covid and Ukraine war on inflation has faded and BoE is waiting for longer-term effects to decline

• Business live – latest updates

UK interest rates could be cut this summer, the Bank of England’s outgoing deputy governor said on Monday, adding to the expectation that a first reduction in borrowing costs could come as soon as next month.

Ben Broadbent, the Bank’s deputy governor for monetary policy, said that if the economy evolves as expected, borrowing costs could possibly be lowered “some time over the summer” in response to a steep fall in inflation.

The chancellor will have good news to pass on this week. But he knows the cost of living crisis may not be over yet

Jeremy Hunt knows it. Rachel Reeves knows it too. The Office for National Statistics will come bearing good news on Wednesday when it releases the latest inflation figures. The only real question is just how good the news will be.

In the year to March, annual inflation as measured by the consumer prices index stood at 3.2%. The figure for April will be a lot lower and if Hunt gets lucky it might even fall as low as the government’s 2% target.