To say economics is an inexact science is only half right. It’s inexact all right, but it’s not a science, it’s more a guessing game, a kind of blind man’s bluff in which the elusive ‘it’, forever wriggling beyond reach, is the truth. 

Economics has something called the multiplier theory. It works like this: you put five economists in a room and before you can say ‘Adam Smith’ you have 20 different forecasts, almost all of them wrong.

This is not an exaggeration, or, as the economist might put it, a conjectural approximation. It is an observable fact. Take the question of inflation and its opposite, deflation.

At present, economic opinion is almost equally divided between those who forecast that the UK is soon to be beset by rising prices and those who argue the opposite, that prices will fall.

These are not trifling semantic differences of opinion; they are irreconcilable interpretations of the available data. It is as though the same satellite picture shown to two meteorologists resulted in one declaring that a heatwave was imminent and the other that arctic storms were brewing. They can’t both be right, though it’s possible that both could be wrong.

So, are we in for inflation or deflation? The view from the saloon bar stool is that surely we can’t have both. The economist, however, knows different. Without benefit of drink he declares that, yes, simultaneous inflation and deflation is not only possible, but likely. You can have a heatwave and a cold snap at the same time.

According to Pimco, the world’s biggest bond investor, the UK faces both inflation and deflation. Confused? So you should be, but that’s the way economists like it. After all, if it was nothing more than common sense we should all be economists and where would that leave those purporting to be specialists in the field?

To be fair to the economists – even though they are undeserving of such generosity – there is a multiplicity of often conflicting data. Key economic indicators include balance of payments, GDP, consumer and business confidence, prices, wages and sales figures, monetary policy, interest rates, employment figures and housing statistics.

To interpret all of these is rather like asking an ancient seer to divine the meaning of chicken entrails, rummage through the runes, consult the spirits and place the combined findings within the context of astrological circumstance. The result is bound to be wild supposition disguised as a forecast.

Far simpler, you might think, to focus on just one or two indicators

Take consumer confidence. That’s a pretty sound and measurable pointer. Or is it? Two recent sets of figures illustrate the point. The first shows that the tooth fairy is bucking the credit crunch in Britain by paying children all-time high prices. The value of a milk tooth has increased by 33 per cent since 2009, with one in 10 parents giving £5 or more to their children.

The national average is £1.63 but there are significant regional variations.

The average for a tooth in London is £2.21, or £44 for a set. In Birmingham, the average is just £1.25, or £25 per set.

Contrast that with a Halifax report showing that the average weekly pocket money received by youngsters currently stands at £5.89, a significant fall from £6.24 in 2009.

One set of figures points to inflation, the other to deflation. Even discounting regional variations, tooth fairy analysis is a subject too complex to go into in depth, but the figures could easily be skewed by an abnormally high intake of sugary substances.

Pocket money statistics are also open to contamination since they fail to take into account ancillary sources of income from enterprises involving the playground barter of cigarettes and bootleg MP3 downloads.

The inescapable conclusion is that economic forecasting is a blend of conjecture, hokum and hunch and should be treated accordingly. The Treasury’s economic models – complex, sophisticated and devised by the brightest brains that academia can provide – are, when it comes down to it, as reliable, credible and as open to misinterpretation as the mysterious forces that animate the tooth fairy.