UK shoppers are keeping calm and carrying on. Why? | Larry Elliott

Consumers are in either denial about the economy or think they are managing ... for now

The UK economy is a puzzle. Inflation has burst above 10% for the first time since Argentina was gearing up to invade the Falklands in early 1982. Prices are rising far more quickly than wages. Consumer confidence has plumbed depths not seen during any of the many misfortunes of the past half century.

And yet, the official data shows the British public is carrying on shopping regardless. Retail sales were higher in July than they were in June despite the progressively tighter squeeze on living standards. Airports are busy with holidaymakers, house prices keep on rising. Odd sort of crisis, you might think.