The foundations of Gordon Brown’s economic strategy really did start to crack on Tuesday, just as the Tories were tabling their motion of no confidence in him in the House of Commons. But what threatens the Chancellor’s economic reputation has nothing to do with “pension raids”, or fiscal imprudence or any of the other trumped-up charges that the Tories tried to heap on Mr Brown. It is, in fact, a shock for which the Chancellor could hardly be blamed at all, but which poses a far greater threat to his ability to govern the country successfully than any of his alleged offences against pensioners, taxpayers or health service employees.

The shock in question is the news that Britain’s inflation, instead of stabilising and then gradually subsiding as generally expected, is accelerating sharply and maybe even spiralling out of control. To use the word “spiralling”, with its connotations of the destructive wage-price spirals of the 1970s and 1980s, may seem alarmist. After all, the 3.1 per cent official inflation figure announced on Tuesday is only 0.1 percentage point outside the tolerance zone agreed with the Governor of the Bank of England when Mr Brown mandated him in 1997 to aim for a 2 per cent inflation target — and to write a letter of explanation if this target was missed by more than one percentage point.

Why, then, do I use such hyperbolic language? Because the stage-managed correspondence of Mervyn King, the Governor, with the Chancellor is by no means the worst of this week’s economic events. More disconcerting than the jump in the inflation figure itself is the economic backdrop against which it has occurred. This week’s 16-year inflation record coincided with the pound rising above $2 for the first time since 1992. The strengthening of the pound normally should have subdued inflation, yet prices have gone up much faster in Britain than in the rest of the world. Inflation in Europe, America and Japan has recently subsided as oil prices have stabilised; why then are British prices moving the other way?

The only reasonable conclusion is that underlying inflationary pressures in Britain — not just from oil and food, but also from consumer goods and services more broadly — are now considerably stronger than in other advanced economies.

To make matters worse, these pressures are likely to intensify because of a statistical quirk unique to Britain: the divergence between “official” inflation, as measured by the 3.1 per cent increase in the recently introduced consumer price index (CPI), and “headline” inflation, as presented by the 4.8 per cent increase in the traditional retail prices index. The RPI has been the main gauge of inflation in Britain for 50 years and government departments, trade union bargainers and employers still use it as the benchmark for setting wages, pensions and financial payments. Many people believe that the CPI measure understates significantly the true cost of living in Britain, because it excludes such crucial elements as mortgages and council taxes.

Normally, the two indices move together, with an average gap of only about half a percentage point, so the difference doesn’t matter very much. In the past year, however, they have diverged widely, with CPI inflation drifting only slightly higher than it was a year ago, while the RPI figure has soared to levels not seen since 1991.

The debate about whether the CPI or the RPI is a truer measure of inflation is normally of interest only to academics, but when the disparity becomes as wide as it is today this technical dispute suddenly acquires political and economic significance. When inflation on both measures was very low, as it was between 1999 and 2005, public scepticism about the CPI did not matter. But when RPI inflation is running at almost 5 per cent, while the Chancellor insists that public sector pay settlements must all be based on his official 2 per cent CPI target, large swaths of the population will start to feel systematically cheated by government statistics.

This sense of injustice will be aggravated by the Government’s continued use of the RPI for uprating pensions and index-linked investments. On present trends, therefore, pensioners and investors will receive 3 per cent higher “inflation protection” annually, than what is on offer to most employees.

As this injustice is fully appreciated, the next step may be for people to treat everything they hear about inflation from politicians and central bankers as a fraud. The step after that will be to assume a naturally accelerating inflation rate year after year — and finally to expect ever-higher wages to compensate for these ever-higher prices. In other words, a return to the inflationary mentality of the 1970s and early 1980s could soon be on the cards.

Such a psychological reversion would jeopardise all Britain’s recent economic achievements. Even a moderate revival of the inflationary behaviour of the 1980s would quickly force interest rates much higher, triggering the meltdown in housing and the wave of personal bankruptcies long predicted by the prophets of doom.

While interest rates and inflation remain subdued, it has been perfectly rational for consumers and businesses to keep increasing their borrowings. But should inflation ever return to the levels of the 1980s and early 1990s, the whole new British economy, which is built on foundations of cheap long-term credit, would collapse like a house of cards.

To prevent such a disaster, the Bank of England must act quickly to curb inflationary expectations — one way to do this would be to raise interest rates next month by more than the traditional quarter point.

The Bank can no longer afford only to indicate the various temporary factors, such as rising oil prices, that have boosted inflation — and then wait complacently for these trends to reverse of their own accord. Restoring credibility to the 2 per cent inflation target is now a matter of urgency. And time is not on Britain’s side.

In the next year or two, all the main risks are likely to be in the direction of faster growth and inflation. By late 2008 the entire world economy should be in a coordinated boom, with America pulling out of its present slowdown, Japan reviving, Europe bouncing back from this year’s tax rises and China continuing to grow at an explosive rate. With the global economy firing on all cylinders, inflationary pressures are bound to intensify from 2008 onwards. If the Bank of England does not get prices back under control this year, it could be too late to tame the inflation monster.

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