HUGE petrol and food price increases have pushed up the UK cost of living, cutting workers’ wages and living standards.
The Office of National Statistics confirmed yesterday that the costs of food factories had risen by 6 per cent in the last year.
It is now estimated that this increase, the highest annual rate since 1993, will lead to food costs increasing by £1,000 per annum for the average working class family.
In the face of this onslaught the UK official inflation rate rise to 2.1 per cent in October, breaching the government’s 2 per cent target, was taken as a complete understatement of the real inflation rate.
This figure was up from September’s rate of 1.8 per cent, while the official RPI inflation measure, which counts mortgage interest payments, rose to 4.2 per cent in October, from 3.9 per cent.
Bad enough as it is, this figure is also being taken as a complete understatement.
In the real world, petrol pump prices rose by 2.7 pence per litre in October, reflecting the increase in fuel duty that came into effect on the first of the month, the ONS (Office of National Statistics) said.
Oil prices remain close to record highs near $100 a barrel, and the average price of petrol rose above £1 per litre last week.
Massive hikes in the prices of meat, fruit, breads and cereals also led to an increase in food costs, the ONS said.
On Monday, data showed that rising petrol, chemicals and food prices had sent factory gate inflation to the highest rate for nearly 12 years.
Meanwhile, an emergency meeting of the Road Haulage Association yesterday signalled that the UK is on the brink of huge fuel price protests as thousands of hauliers go bust.
Phil Flanders, Director of the Road Haulage Association of Scotland and Northern Ireland said: ‘The hauliers are suffering badly because of the volatility of fuel prices.
‘The government put two pence on a litre of duty back in October and since then prices have gone up by another ten pence a litre and it’s causing great concern.
‘The hauliers are having great difficulty passing it onto their customers. The customers who are trying to compete in a global market are also struggling because they can’t pass it onto their customers either.’
He warned: ‘We are trying to decide what our options are.’
As well, first-time buyers are finding it increasingly expensive to get onto the property ladder, the Council of Mortgage Lenders (CML) reported yesterday.
The average first time buyer spent 20.4 per cent of their monthly income on mortgage payments, the highest level since 1991.
The report also found there were 28,400 loans to first time buyers in September, down from 34,800 in August.
The CML blames higher interest rates.
‘Higher interest rates are now beginning to slow the housing market,’ said CML director general Michael Coogan.
‘The Bank of England’s decision not to reduce rates earlier this month will have disappointed many borrowers,’ he added.
European stock markets fell yesterday, reflecting the gloom in Asia and on Wall Street as fears over the world’s economic prospects deepened.
Analysts say fears are increasing that banks are carrying more losses than first thought as a result of the sinking US mortgage market, and that the recent queues outside the Northern Rock branches are going to be repeated at some of the big banking institutions.
The president of private equity firm Blackstone, Hamilton James warned that the US home loans crisis was ‘scarier’ than first thought.
Teun Draaisma, head of Morgan Stanley’s equity strategy said that investors should cash in their shares and that ‘cash is now the investment class of choice’.