THE UK CPI inflation rate rose to to 4.4% in February from the January figure of 4%, while the RPI inflation rate which includes housing costs rose to 5.5% from 5.1% in January. The Bank of England’s target inflation rate figure is 2%.
The continuing rise in inflation is driven by the deepening world crisis of the capitalist system and its rapidly rising food, fuel and clothing costs.
The pressure on the Bank of England to increase interest rates to protect the pound is now getting irresistible, despite the fact that increases in the bank rate will see a further decline of the economy and much heavier unemployment.
The current policy of the bank is to stake all on the inflationary tide receding, and to rejoice in the way that the ‘temporary inflationary wave’ is slashing wage costs on a daily basis, on top of the public sector pay freeze. The way that pensioners are seeing their pensions and savings being destroyed is being treated as ‘unfortunate collateral damage’.
Food and petrol price rises are due to rocket in the coming months at the same time as hundreds of thousands of public sector workers are sacked. The slashing of wages, pensions and benefits is certain to get greater as the official inflation rate reaches over 6.0%.
Financial commentators are already counting on a series of 0.25% interest rate rises, to douse the struggling economy with an ice-cold shower. This will produce much heavier unemployment. This is being touted as a price worth paying to save the bankers and the bosses.
With a number of the oil producing states on the brink of civil war the worst case scenarios of the various schools of bourgeois economy could prove to be wildly optimistic.
The notion that somehow or other Britain’s tiny manufacturing base – a product of Thatcher’s opposition to industry and love of the banks – will export the UK out of slump, was also knocked on the head yesterday.
The Office for National Statistics announced yesterday that public sector borrowing last month was £11.8bn, a record for the month of February.
This official figure was almost double the £6.9bn forecast by economists.
Even with all of the cuts, thus far, the massive growth of unemployment has led to an increase in public spending.
In fact, the final quarter of 2010 saw the UK capitalist economy shrink by 0.6%. The economy is shrinking and not growing.
The harsh reality is that we are in the greatest ever crisis of the capitalist system.
This crisis has been qualitatively sharpened by the drive to war, as seen in Libya, and by other disasters, such as the Japanese tsunami and nuclear power disaster.
On the eve of the budget all Osborne has to show for all of his savage cuts is an economy that is collapsing, with wages, pensions and benefits being slashed, driving living standards back to the 1950s.
However, he does have billions more to offer the bankers in the form of a huge increase in their foreign earnings achieved by his decision to slash the amount of tax paid by the bankers on their foreign profits.
The Tory-led coalition remains true to the ruling class, as it sets out to resolve the crisis by stripping the working class and the middle class of all of the gains made since 1945, to provide the cash to finance the banks and its attempt to reconquer states like Libya.
There is only one way that this descent into the abyss can be halted and that is by carrying out the British socialist revolution.