INFLATION rose to 3.1% in November, the highest in nearly six years, as the squeeze on households continued and prices rose, slashing further into workers’ wages.
The most recent data shows that average weekly wages are growing at just 2.2%. Millions of workers have seen their pay held down by a one per cent pay cap for up to a decade!
In November, the Bank of England raised its key interest rate for the first time in more than a decade – from 0.25% to 0.5%. More rate rises are now on the way. Official data shows that food inflation has picked up, especially prices for fish, oil and fats such as butter and chocolate.
Richard Lima, chief executive at Retail Economics lamented that the rise in inflation had come ‘at precisely the wrong time for retailers’. He said: ‘In the run-up to Christmas, the cost of living is now rising at the fastest rate in five years, and remains uncomfortably high for households.’
He added that food inflation ‘is one of the most transparent indicators of living costs and often the catalyst to cutbacks on spending elsewhere.’ Poor households face a miserable Christmas this year.
Lord Adair Turner, the former head of the Low Pay Commission, pointed out after the November budget that ‘today real wages are below where they were in 2007.’ He concluded: ‘That is not the capitalist system delivering its promise that over a decade or so it will raise all boats, and it is a very fundamental issue.’
Paul Johnson, director of the Institute for Fiscal Studies, added that the economic forecast published in that Budget made for ‘pretty grim reading’. He said the prediction that average UK earnings in 2022 could still be less than in 2008 is ‘astonishing’.
The Resolution Foundation think tank found that the UK is on course for its longest fall in living standards since records began over 60 years ago. It said that real disposable incomes are now set to fall for 19 successive quarters. The Foundation pointed out that tax and benefit policies would take an average of £715 away from the poorest third of households a year, while giving £185 to the richest third!
Meanwhile, house prices in the East Midlands rose at more than three times the pace of London in the past year. Property prices in the region rose by 7% in the year to October – the fastest in the UK, the Office for National Statistics (ONS) said.
The slowest house price growth over the same period was a 2.1% rise in London. However, average prices in the capital remain the highest at £481,000, compared with a UK average of £224,000, the ONS figures show.
The typical UK house price rose by £10,000 compared with a year earlier. Jonathan Samuels, chief executive of lender Octane Capital, said: ‘London continues to lag behind the rest of the country in terms of annual price growth.
‘But London’s slowdown is no fall from grace, just a necessary correction following the exuberant price growth of a few years ago. Prices in certain London boroughs are still stratospheric compared to other areas of the country.
‘The fact that you can still buy 15 houses in Burnley for the price of just one in Kensington and Chelsea is a case in point.’ It is obvious from the above that the capitalist system is broken.
However, the trade union leaders are on their knees, tolerating the crisis situation of their members. Workers must demand a recalled TUC Congress to address this crisis. The TUC must draw up a sliding scale of wages and demand that wages keep pace with an inflation rate based on the rise in necessities drawn up by the TUC.
It must also demand no sackings, and call for working hours to be reduced to defend jobs with no loss of pay. The TUC must set the date for a general strike to bring down the Tories and bring in a workers government that will nationalise the banks and the major industries placing them under workers management, replacing bankrupt capitalism with socialism!