YESTERDAY the Office for National Statistics (ONS) reported that the UK inflation rate had more than doubled in April this year as energy costs soared and the prices of goods in retail shops increased.
ONS figures show that the Consumer Price Index (CPI) inflation rate jumped from 0.7% in March to 1.5% in April as a result of sharp increases in gas and electricity charges, with energy prices increasing by 8.5% between March and April as the temporary cap on prices for customers introduced by the Tories in January 2020 ended on 31 March.
Increases in petrol and diesel drove fuel inflation up by 13.6%. Petrol prices increased by 1.8 pence a litre and diesel by 1.4 pence a litre
But the real cost to workers is found in the Retail Price Index (RPI) – a separate measure of inflation based on what the average person has to spend on food, train tickets, student loan repayments amongst other items – which leapt much higher to 2.9% in April. In fact the real rate of inflation will soar much greater than the 1.5% or 2.9%.
The cost of raw materials for the UK’s already declining manufacturing industry is up by 9.9% over last year, while input costs are over twice the amount companies can charge customers. Input costs are those incurred to make a product, for example raw materials, labour and factory overheads.
All this is driving a catastrophic crash in manufacturing industry at the same time that spiralling inflation is driving down the living standards of workers.
The Governor of the Bank of England, Andrew Bailey, struck an optimistic note saying the rise in inflation should be temporary, but that the BoE and other central banks around the world are watching carefully for signs that inflation is driving up.
Meanwhile Samuel Tombs, an economist at influential Pantheon Macroeconomics, put the real capitalist case for optimism saying that rising unemployment after the furlough support ends and subdued wage growth will keep a lid on inflation.
In other words, the banks and the international finance industry are banking on the working class paying through mass unemployment and wage cutting to keep inflation from raging out of control and crashing the world capitalist system.
This is behind Tory plans to let millions of workers’ jobs disappear in September when the furlough scheme and support for businesses ends, while at the same time chancellor Rishi Sunak inflicts a pay freeze on the public sector.
The GMB union National Secretary, Rehana Azam, responded to the inflation figures, saying: ‘The cost of living is now rising at pace again, yet Ministers are pressing ahead with their cruel pay freeze policy for millions of public sector workers. If wages continue to fall behind inflation then recruitment and retention challenges will become unmanageable and the delivery of vital public services will be put at risk.’
Azam added: ‘We need a high-wage economy in which work is fairly paid, not more real terms cuts that fall hardest on some of the workers who have borne the heaviest burden during the pandemic.’
The reality is that bankrupt British capitalism will never provide a high wage economy for workers, and all appeals to their better nature are a useless diversion from the real struggle against mass unemployment and wage cutting.
In the worst economic crisis in its history, capitalism has no way out except to drive the working class back to the poverty conditions of the 19th century.
The only way that this crisis can be resolved is for the working class to put an end to this bankrupt capitalist system and go forward to socialism.
This means clearing out those union leaders who are reduced to simply begging the Tories for assistance, and replacing them with a new leadership that will mobilise the strength of the working class in a general strike to bring down the Tories and go forward to a workers government.
A workers government will nationalise the banks and major industries placing them under the management and for the benefit of the working class, building a socialist planned economy.
Only the WRP is building the leadership required to take this struggle to victory – join today.