Jeremy Warner: Recession? Some of us are living in clover

Outlook If you happen to match the following profile – well-paid civil servant with big mortgage planning on buying a new house and car – then you've good reason to celebrate. Thanks to lower mortgage costs, your disposable income will be soaring.

Your job will be as secure as any in the land, house prices have fallen by a fifth, and the price of a new car has been plummeting too. If today's Budget brings news of a car-scrappage scheme, the Government may in future even pay you a £2,000 subsidy to buy a new one. It's almost too good to be true, and, like all good things, it cannot last. So enjoy it while you can.

The trouble with inflation is that one man's clover is another man's bed of nails. Recession? What recession? For those in a secure job with a big mortgage, things have rarely looked better. Yet for those who live on their savings, which includes large numbers of pensioners, the picture looks bleak. In attempting to revive the economy with zero interest rates, the Bank of England is forcing the thrifty to subsidise the profligate. It's divisive and unfair, which is another reason why it cannot last.

For the time being, inflation is falling fast, at least on the official numbers. Figures announced yesterday show that in March the Retail Prices Index (RPI) slipped into negative territory, the first such negative month since 1960 when Saudi Arabia and a clutch of other oil-producing nations were busy setting up Opec.

The RPI was the measure of inflation, you will recall, that the Government discarded a number of years ago for inflation-targeting purposes in favour of the then more compliant Consumer Prices Index (CPI).

With falling interest rates and house prices, the relative position of the two indices is now reversed. As the RPI goes negative, the CPI is proving surprisingly resilient to disinflationary pressures at a still way above target 2.9 per cent. Some forecasters expect the CPI too to turn negative some time this year, but don't bet the ranch on it.

CPI inflation has proved remarkably sticky, and if you take "core inflation", which strips out "volatile" prices such as food and energy and is traditionally the measure that central bankers take most notice of, then it actually rose marginally last month. This in the midst of the most serious recession of the postwar period. Inflation as it stands scarcely justifies the present zero interest-rate regime, let alone the policy of expanding the money supply through quantitative easing.

RPI is the measure normally used by unions for wage-bargaining purposes, this for the obvious reason that it is usually a good deal higher than CPI. Hilariously, just as the Government is now sheepishly trying to shift the focus back on to the RPI, unions are rushing to distance themselves from the once sacrosanct measure.

According to Brendan Barber, the TUC General Secretary, using RPI as an excuse to freeze wages would damage Britain's economic interests, as the last thing the economy needs right now is falling demand. That's a good one. It is the patriotic duty of employers to raise wages.

All that policy action, from quantitative easing to zero interest rates and the Government's let-rip approach to the public finances is going to have to be withdrawn at some stage, and judging by the now manifest signs of the recession bottoming out, that point may be sooner than generally imagined.

The monetary and fiscal stimulus applied is so great, it is almost bound to have inflationary consequences at some stage, however bad the economic contraction. The obvious danger is that these consequences will manifest themselves before the recovery is sufficiently well established as to be self sustaining. As I say, if you are that happy cohort that bizarrely finds itself a great deal better off, enjoy it while you can.