THE CPI rate of inflation fell to 1.5% in the year to May 2014, down from 1.8% in April, according to the Office of National Statistics (ONS).
Falls in transport services’ costs, notably air fares, were the largest reason behind the reduction in the rate.
This means that as far as working class families are concerned, who do not frequently use air transport, there has been no fall in the real inflation rate at all. Other large downward effects came from the food and non-alcoholic drinks and clothing sectors. They came from a variety of product categories, most notably bread & cereals, meat, vegetables, soft drinks and garments, particularly women’s outerwear.
Partly offsetting these downward effects, upward price movements for motor fuels stopped the rate of inflation falling further. Average petrol and diesel prices rose between April and May this year, and could leap in the next set of figures as the explosive situation in Iraq and the Gulf further develops.
The prices of games, toys and hobbies (particularly computer games) also rose this year. Prices in the housing, water, electricity, gas and other fuels sector currently have the largest upward effect on inflation, contributing to over a quarter of the total.
The rate of inflation, as measured by the Retail Prices Index (RPI), which includes housing costs, fell to 2.4% in May from 2.5% in April.
Prices, however, are still increasing faster than average earnings, which rose 0.7% in the three months to April, meaning that while the cost of living is still rising rapidly the standard of living is falling catastrophically.
Other figures from the Office for National Statistics (ONS) showed that UK house prices leapt by 9.9% in the 12 months to April to reach a new high of £260,000.
The ONS said house prices rose strongly across the UK, with Wales, Scotland and Northern Ireland all picking up pace. London, where prices were up 18.7%, remains the driving force behind the housing bubble.
But excluding London and the South East of England, the cost of a home was still 6.3% higher than 12 months before.
Campbell Robb, the chief executive of Shelter, commented: ‘Each rise in prices means more people are stuck living in their childhood bedrooms, or trapped in the cycle of moving from one expensive rented home to the next.
‘This is a problem that the government can fix. We need a new generation of quality part-buy, part-rent homes, and to make sure that small builders can get hold of the land and finance necessary to build them.’
The ONS reports its figures a month later than other organisations, though the calculation is based on the widest sample of mortgages. The Nationwide building society said May saw an annual rise of more than 11%.
Last week, Chancellor George Osborne announced his plan to try to prevent the housing bubble from breaking the banks once again. He is to give the Bank of England the power to impose a cap on home loans related to income or the value of the house.
At present, the Bank can advise on such a cap, but not impose it. The new power should be in place before the end of this Parliament in 2015, the chancellor said.
Meanwhile the Bank of England admitted that productivity is 16% below its pre-crisis trend – but says it is at a loss to understand why.
Its latest quarterly bulletin says that since the onset of the 2007-08 financial crisis, labour productivity in the UK has been exceptionally weak.
The UK is known to be less productive than other similar developed countries, meaning that the working class is repaying the bosses for falling living standards by resisting all of the efforts to speed it up and increase its rate of exploitation.
The above data emphasises the need for the trade unions to begin a massive offensive on wages.
The TUC Congress must take action on this issue and demand at least a £1 an hour increase in wages for every worker in the UK. As well there must be a sliding scale of wages introduced.
Wages must be adjusted on a monthly basis to keep pace with a trade union cost of living index based on the increases in working class necessities which no family can do without. If the bosses will not agree to this, an indefinite general strike must be called to bring down the government and bring in a workers government.