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Hello and welcome to a special Saturday edition of Coffee House Shots. I'm Katie Balls and I'm joined by James Forsyth and Kate Andrews.

How bad will inflation get? In an interview this week, the Bank of England's new chief economist has warned that inflation is like to rise close to or even slightly above 5%.

Kate, to kick things off as our economics editor,

you've written about the inflationary tiger.

It's adorned the cover of the spectator a few times.

Are these warnings, you've been writing about for some time,

the chances have been talking about for some time,

starting to come to fruition?

Yes. So the fear that the Chancellor has had for many months now, and what I think is one of the

best frames to view his March budget, and we will soon be also analyzing his October budget

next week, is that even a historically small rise in inflation and rates

could lead to having to find tens of billions of pounds extra additional just to service the debt.

Now, you know, the Treasury estimates that a 1% rise in inflation and rates could lead to

having to find 25 billion pounds extra just to pay the bills.

And to be clear,

this money wouldn't get you new hospitals, it wouldn't get you more nurses, it wouldn't get you extra police out on the beat. It would be to service the debt, the money that we've already

borrowed. That's not politically desirable and could put the finances in an even more difficult

state. What we're now seeing is inflation going up.

There was a little bit of hope this week that we saw that the most recent CPI figures were 3.1%

down from 3.2%. But that's more of a technical issue than it is a real change because we're

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