RISING crude oil prices are driving up the price of petrol at the pumps.
Petrol is now at around 92 pence a litre, an increase of eight pence a litre in the last month. This works out as an increase of up to 40 pence a gallon in the last month, with petrol now at £4.40 a gallon, an inflation rate of over 10 per cent.
Diesel is even more expensive with a comparable inflation rate.
There are tens of millions of car and lorry drivers in Britain having to contend with the steep rise in petrol and diesel prices.
At the same time, the working class and the middle class as a whole have faced steep rises in gas and electricity prices, leaving them with up to 20 per cent extra to pay for these vital resources.
Then there are the major increases in the Council Tax. These have been the cause of elderly people being sentenced to prison terms because they could not pay their Council Tax bills.
The increases in bus and rail fares, and air travel have also been substantial, and a major burden to millions of people.
With just these increases in mind, for the government, through its Office of National Statistics (ONS), to declare that consumer price inflation (CPI) reached 2.3 per cent in July, an increase of 0.3 per cent from June, is just a very bad joke.
In fact, it proves that the inflation figures are bent to crudely understate the real rate of inflation and the scourge that it is proving to be for millions of working people and their families.
As it is, the ONS blamed rising fuel prices for taking the CPI 0.3 per cent above the government’s target figure. Even that figure is the highest level reached since the method of calculating the inflation rate was changed in 1997.
Headline retail price inflation (RPI) which includes housing costs, remained at 2.9 per cent for a second month. The underlying rate of RPI increased to 2.4 per cent from 2.2 per cent in June.
In its quarterly inflation report last week, the Bank of England had warned that inflation costs would rise above the government’s target of two per cent.
The real inflation rate is now so serious that the banks are starting to claw back the £1 trillion in domestic debt that has been built up under the Blair governments, in which cheap credit was the principal tool for keeping the British economy afloat.
The banks are now reporting that personal debts of over £100,000 are not uncommon.
Earlier this month, the Bank’s rate-setting Monetary Policy Committee cut interest rates to 4.5 per cent from 4.75 per cent after appeals from the CBI and the employers federations that unless credit was cheap, whole swathes of what is left of the manufacturing base would be wiped out
In fact, so dicey is the situation that more than half of all mortgage lenders failed to pass on the full Bank of England interest rate cut to borrowers.
Only 58 of 120 lenders had passed on the Bank’s 0.25 percentage point cut. Now, the leap in real inflation will lead to rate rises, and to major bankruptcies and rising unemployment.
The workers’ movement needs to have a policy for this developing crisis. The trade unions must draw up their own cost of living index, which will include all of the essential items that workers need to get a real inflation rate figure. Then they must win wage settlements that automatically increase wages as this trade union cost of living index rises.
At the same time, the trade unions must demand the nationalisation of all bankrupted industries so that the working class does not pay for the crisis with the loss of millions of jobs, and a workers’ government that will carry out socialist policies so that the employers bear the brunt of the crisis, not the workers or the middle class.