ACCORDING to the latest figures, factory input inflation – that is the increase in raw materials paid for by manufacturers – rose by a staggering 13.4% in the year ending January 1st, 2011, driven up by the soaring cost of oil and metal, along with other imports.
All this makes a nonsense of the predictions of the Bank of England (BoE) and its governor, Mervyn King, who confidently predicted an inflation rate of 2%.
This figure has been revised up to 3.7% with King now admitting that it will reach 5% in the near future.
Even these official rates of inflation do not reveal the real cost of living affecting workers and their families.
The biggest increases have been recorded in energy bills and food prices – things that swallow up the largest proportion of the income of working class families.
The response of the BoE has been this week to hold the interest rate at 0.5%, resisting increasingly strident calls for an increase to at least 1%.
The rationale of King and the BoE is that by holding interest rates at such a historically low level they will somehow ‘kick-start’ near-terminal British capitalism back into life.
The fact that they have maintained this level for nearly two years without any sign of ‘recovery’ has shown that their economic theories and strategies are as bankrupt as their economy.
Far from recovering, the output from British factories declined by 0.1% last December – the first fall in nearly a year.
All this makes a complete nonsense of the coalition’s empty boasts about recovery and private industry growing and taking up the vast numbers of workers being flung out of their jobs in the public sector.
There is no recovery, there is no upturn for British capitalism – instead we are seeing a period of what bourgeois economists term ‘stagflation’, economic stagnation and inflation at the same time.
In fact, it is not stagnation of industry but its total collapse that is on the cards in the immediate future.
Behind all these figures and percentages lies a stark reality for workers and, increasingly, sections of the middle classes.
Millions will be thrown out of work as the Tory coalition smashes up the public sector and the welfare state while at the same time they will be joined by those losing their jobs as private industry folds up and factory production collapses.
The response of the BoE will be to raise interest rates creating an inflation of mortgage interest rates, while also stoking up more unemployment.
Even a 0.5% increase in the interest rate will dramatically increase mortgage repayments, and house repossession will become a reality for millions of home owners.
What is clear is that no amount of economic juggling by the government or the Bank of England can solve the crisis of British capitalism.
Their real strategy is to unload the full burden of the crisis onto the backs of the working class through unemployment and wage cutting for those lucky enough to have a job.
At the same time, they are forced to cut every expenditure on the welfare state and pensions in order that the bankers can survive and prosper.
All this leads to one inescapable conclusion: either the working class is forced to accept poverty at starvation levels or it must destroy capitalism once and for all.
Time and again the leadership of the unions has attempted to head off the rising anger of workers who refuse to accept pauperisation, and divert it into safe protest action under the lying claims that there is an alternative to winning the class war, between the working class and the bosses and bankers.
This decrepit reformist leadership must be removed and replaced with a revolutionary leadership prepared to bring down this government through the organisation of the general strike, and to go forward to a workers government and socialism.