The stubborn nature of inflation stops the Bank of England from acting, pushes living costs further up and is seemingly ignored by the government.
Today’s consumer price index (CPI) figures (pdf) for November stayed at the 2.7% it had been at in October. The CPI remained steady last month only as the result of a balancing act, comprising of a fall in petrol prices, against the rises in food prices and energy bills. Analysts had expected inflation to fall from 2.7% but were surprised by today’s figures.
The retail price index (RPI) however, saw a fall from the 3.2% in October to 3% in November.
Labour has criticised the government for doing nothing to help those who are being hit by inflation continuing to run at a high level, shadow Treasury minister Cathy Jamieson saying:
“This out of touch government has got its priorities all wrong.
“Instead of giving a £3 billion tax cut only to the very richest people in the country David Cameron and George Osborne should be helping striving families who are struggling with the rising cost of living.”
The ONS has specifically identified bread, cereals and vegetables as contributing to the overall rise in food prices that happened throughout November, with the Bank of England’s target of 2% in the next few months looking in jeopardy due to rising energy bills and projections of further rises.
According to Reuters, the central bank last month predicted the Bank of England’s target rate will not be reached until the third quarter of 2014.
In terms of the impact of today’s news, with an ailing economy, rising living costs and austerity, the picture is bleak for vast swaths of the country; specifically, however, the Telegraph reports the stubborn rate of inflation is having an adverse effect upon saving and savers in the upper echelons of tax system, as well as investors.
The BBC reports that the future BoE Governor, Mark Carney, has made noises indicating a possibility of ditching inflation targets, instead using nominal gross national product, a combination of GDP and inflation. The rate of inflation at the moment is restricting the moves that can be made by the Bank of England, quashing the use of, for example, quantitative easing.
With such difficult times looking to extend into the foreseeable future, the impotence of the Bank of England and the government’s focus not on the impact of living costs, but on their deficit obsession, makes for extremely grim reading.Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.
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