RECORD BREAKING UK inflation rate statistics were reported by the ONS (Office for National Statistics) yesterday.
Inflation rose at its fastest annual pace for nine months in December when the Consumer Prices Index (CPI) inflation rose 0.6% last month, with the annual rate up to 2.9% from 1.9% in November.
That was the biggest monthly rise in the annual index since records began and exceeded the City’s expectations for an increase to 2.6%.
The Retail Prices Index (RPI), which includes housing costs, rose to 2.4% in December, its highest level since November 2008. This was a rise from 0.3% in November, and also constitutes the biggest monthly rise in the annual rate of RPI inflation since 1979.
For the previous six months it had been in negative territory.
The ONS stated yesterday that ten out of 12 sub-sectors recorded higher prices, with the biggest increases coming from transport, clothing and footwear.
Core CPI, which excludes food, energy, tobacco and alcohol, rose by 2.8% on the year, which is the fastest pace of growth since records began in January 1997.
The CPI does not take into account certain items that are included in the RPI. The Retail Prices Index includes council tax, mortgage interest payments, buildings insurance and house depreciation.
Oil and gas prices plus food prices are expected to continue rising on a record breaking scale. With VAT restored to 17.5 per cent January will see another rise in the inflation rate to about 4 per cent.
The leap in the inflation rate is an explosive development seeing that both Labour and the Tories support wage freezes in the public sector.
Despite warnings that their policy will cause a general strike the Tories have said that if they become the government, they will bring in new anti-union laws to make strikes for more wages illegal in the public sector.
Every section of the working class and the middle class are affected by the rising inflationary tide.
Large numbers of workers have taken wage cuts after their trade unions advised them that this was the best way to keep their jobs.
In the period ahead workers will be driven by the steep cost of living to take strike action for more wages whether the action is legal or not, while the unemployed and those on state benefits will be forced to take revolutionary action or starve.
In fact, the latest statistics from the Bank of England shows that millions of people can no longer live off credit card debt, since they can no longer repay the banks.
There has been a huge rise in the amount of money that banks are writing off as bad debts on their credit cards. The total value of the credit card debt write-offs doubled to £1.6bn in the third quarter of 2009.
In each of the two preceding quarters, the figure had been about £800m. It totalled £3.2bn during the whole of 2008.
Much larger sums totalling many billions of pounds are being set aside by banks and other lenders to cover future losses on credit cards, mortgages, overdrafts, and personal loans.
As of last November, the average credit card interest rate was 15.89%, while the average interest rate for a standard variable rate mortgage was just 3.98%.
The ITEM Club forecast for the next ten years is a decade of ‘painful readjustment’ as the British ruling class is forced to switch to increasing exports from financing debt-laden consumer spending.
‘The consumer is completely cashed out’ says ITEM’s Professor Spencer.
The moment of truth is arriving for the working class and middle class.
The working class will be forced to change its union leaders, and get rid of leaders who have been telling it to accept wage cuts and job cuts.
There has to be a general strike to bring down the Brown government and bring in a workers government that will expropriate the bosses and bankers and bring in socialism.