THE UK’s CPI inflation rate rose sharply in October to 2.7%, a rise of 0.5%, following increases in tuition fees and food prices, with further huge rises in energy prices to come.
The Office for National Statistics (ONS) said education costs rose by 19.1% last month after the government lifted the cap on university fees which were raised from £3,375 to £9,000 a year.
Food prices, especially vegetables, rose after record wet weather earlier this year affected crop yields.
Confectionery prices also increased. The ONS said this was because a number of confectionery products had been reduced in size.
There was an even bigger rise in the RPI inflation rate statistic, which includes housing costs, to 3.2% from 2.6%.
The ONS also announced it would be introducing a new way of measuring CPI inflation next March – the CPIH – which will include housing costs, something that is not reflected significantly in the currently favoured measure, and will further drive up the official inflation rate.
September’s CPI inflation rate was the lowest for almost three years. This is significant as it is the month on which rises in many benefits are based. So while benefit rises will be held down, the real cost of living will accelerate.
The ONS added, rubbing salt into the already gaping wound, that the SSE energy company’s price rise of about 9%, which came into effect last month, was not included in the October inflation figures, which means that they were even more heavily understated than usual.
Other energy price rises to come include: British Gas: 16 November, gas and electricity up 6%; Npower: 26 November, gas up 8.8%, electricity up 9.1%; Scottish Power: 3rd December, gas and electricity up 7%; EDF: 7th December, gas and electricity up 10.8%.
Last month’s cut in the inflation rate and the small fall in unemployment figures were greeted as the beginning of the end of the crisis.
Now all this talk has been revealed to have been a joke in very bad taste, especially since next week’s unemployment figures are expected to show an increase.
The Bank of England is charged with keeping inflation close to 2%, something it has refused to do in recent years, as it would involve increasing interest rates and deepening the slump. They prefer the prospect of galloping inflation destroying living standards, wages and pensions.
On the immediate future, Alan Clarke, economist at Scotia Bank, stated, ‘Onwards and upwards. Utility bill increases are on their way. We’ve also got the effect of the US drought and increased food prices to factor in.’
Meanwhile, Energy Secretary Ed Davey has had to make a statement to the House of Commons as regulators investigate claims that wholesale gas prices have been manipulated in order to push prices and profits even higher.
The investigations by the Financial Services Authority (FSA) and Ofgem follow claims by a whistle-blower.
All of the UK’s big six energy suppliers have rushed to release statements denying any involvement, but they would do wouldn’t they, will be the correct popular response, as workers face much higher energy bills with winter approaching.
The cost of wholesale gas makes up the majority of energy bills – 45% of the average energy bill is made up of the cost of wholesale gas supply costs.
There has to be a clear policy for this crisis adopted by the unions.
• The TUC must draw up its own cost of living index, based on working class and middle class necessities, with wages, pensions and benefits to be automatically revised upwards on a monthly basis, the only way to defend all living standards.
• The energy companies must be renationalised as must North Sea oil and gas.
• There must be a general strike to bring down the coalition and bring in a workers government that will carry out socialist policies, the only way to resolve the crisis in the interests of working people.
