First inflation was the bogey. Then deflation. Now there are already the first vague stirrings of inflation making a come back.

How come? Nothing to do with the underlying state of the economy, which is as bombed out as ever.

No, it is collapse in the value of sterling and the knock-on effect that has for imported goods that is just starting to make itself felt.

Anything made in Japan - and that includes a huge proportion of the TVs and cameras we buy in Britain - is now earning their manufacturers only half as many yen as 18 months ago.

Even with falling costs of production that cannot go on forever. It won't happen immediately but as the boss of John Lewis Andy Street admitted to me, it seems a racing cert that some of that will have to be passed on to consumers come next Christmas.

Talking of racing, Hornby, the makers of Scalextric and the world's best toy train sets admitted today that the fall in the pound is killing its profit margin and that higher prices may be inevitable.

Another high profile victim is the fashion group Mosaic, which owns the Karen Millen and Oasis brands among others. It lost all its currency hedging cover when the Icelandic banking system went down and is now horribly exposed.

The trouble is that many of its rivals will have protection in place, probably through to the summer. It will impossible to push through prices increases when competitors are still discounting like crazy to keep shoppers coming through the doors.

There are other inflationary risks. At some point the oil price will bounce, possibly triggered by some nasty international incident affecting one of the major producing countries.

Although interest rates are likely to remain low for some time to come, when they do start to rise many home owners will be saddled with horrible interest rates. The average tracker is currently at 2.36 per cent above the Bank of England base rate. That's fine when the base rate is 1.5 per cent. But if it returns to more historically normal levels of say 4 to 5 per cent that translates to an mortgage rate of around 7 per cent or more.

There are so many bear traps in this unprecedented downturn that the authorities hardly know which way to look. They had hoped that inflation would not be one of them. But the chances are it will be.