Today's news on inflation is certainly welcome; but we're not on the home straights yet.
A degree of Tory triumphalism is in the air this morning on the back of the latest inflation figures. As expected, the rate of inflation has fallen, this time from 1.9 to 1.7 per cent – the lowest it’s been since 2009.
Make no mistake, this is excellent news. After three years of falling living standards the news that wages are finally starting to catch up with prices should be welcomed by everyone.
However it’s important to get a little perspective: wages are still catching up with inflation – they haven’t caught up. As Richard Campbell of the Office for National Statistics (ONS) told BBC News today:
“Prices are still going up, they are still going up by more than earnings so people will still continue to see some pressure… Although the rate of inflation has fallen, prices overall are still going up and people will still be feeling the pressure.”
As the graph demonstrates, month on month people are still getting poorer as inflation continues to outpace wage growth (albeit by a smaller margin than previously).
Before the chancellor uncorks the champagne, it’s also important to note that even when wages do eventually start to grow faster than inflation there is a lot of ground to make up. The effect of years of stagnant and falling wages has been cumulative – this is why on average people are in real terms £1,600 a year worse off since 2010.
Today’s news is certainly welcome; but we’re not on the home straights yet.
To reach hundreds of thousands of new readers and to make the biggest impact we can in the next general election, we need to grow our donor base substantially.
That's why in 2024, we are seeking to generate 150 additional regular donors to support Left Foot Forward's work.
We still need another 124 people to donate to hit the target. You can help. Donate today.
8 Responses to “Inflation: Less triumphalism please, the cost of living crisis is far from over”
Ed
Labour’s recession? The recession in Britain was part of a worldwide FINANCIAL, not fiscal, crisis. The banks were not regulated and were responsible for the recession, and the only thing Labour should apologise for, and have, is that they failed to regulate the banks properly. Labour’s fiscal policy, however, was not to blame.
As the highly respected economist Simon Wren-Lewis stated: “the debt to GDP ratio was lower in 2007 than in 1997, and the net borrowing requirement was fairly close to a neutral 2% deficit, so it cannot be said that fiscal policy was seriously deficient over this period.” He continues, “[Labour] was absolutely right to try to use fiscal policy to mitigate the impact of the recession, and it was also right to plan to correct the deficit relatively slowly”, and concludes that “[t]he line that the Labour government was responsible for leaving a disastrous fiscal position which requires great national sacrifice to put right is pure spin,”
It’s a shame that even some on the Left have fallen for the myth that Labour were to blame for all of the wrong that has befallen Britain. We should be refuting this myth and getting more people to vote Labour, because a refusal to vote, or a vote for another party, just increases the likelihood that the Tories will be back to increase inequality and lower living standards further.
Ed
Indeed, unfortunately for Gideon, voters will not forget that the Tories have presided over the longest fall in living standards since records began.
Selohesra
OK thanks – think I got it now.
Recession during Labour government was not Labour’s fault but reduced living standards as coalition slowly repair the damage caused by that recession is all the fault of evil baby eating Tories