House price inflation reaches 8.4%

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RETAIL Price Index (RPI) inflation, which includes housing costs, grew by 2.8% in the year ending January 2014, up from 2.7% in December 2013.

This was in contrast to the Coalition’s preferred Consumer Prices Index (CPI), which was 1.9% in the year to January 2014, down from 2.0% in December 2013.

The fall in the CPI rate resulted from price falls for recreational goods & services, furniture & household goods and alcoholic beverages & tobacco.

The CPI rate at below 2.0% puts the Bank of England on the spot, and increases the pressure for an interest rate rise, a rise that Bank Governor Carney is determined not to make.

This is because the average price of a house across the UK has hit £250,000 for the first time, meaning that the housing bubble is growing and a rate rise will burst it, crashing the banks.

The Office for National Statistics (ONS) said the £250,000 figure was reached at the end of 2013.

The Nationwide has estimated that prices rose by 8.4% last year.

While the Bank of England kept its silence yesterday, the trade unions concentrated on the cost of living crisis.

The PCS spokesman commented: ‘Increases in the true cost of living are still far outstripping the rise in wages, so millions of families are worse off, while millionaires are given tax breaks.’

TUC General Secretary Frances O’Grady said: ‘Hard-pressed working people need far stronger pay rises before they can really feel the benefit of falling inflation. As it stands, wages are still trailing behind the rising cost of living.’

Unite general secretary Len McCluskey said: ‘The plain fact is that millions of people in the UK are struggling to make ends meet because of the escalating cost of living crisis.

‘Wage costs are being held down by employers who are imposing pay freezes and pay cuts, using zero-hours contracts and relying on part-time workers who want full-time jobs.

‘Thousands of people using food banks are in work, but being paid poverty wages, while household bills are going through the roof.

‘It takes a person on the national minimum wage, on average, 140 days to pay their gas bill.

‘Britain’s hard pressed workforce needs a big pay rise to put money into people’s pockets – and the corporate sector needs to take the lead as it is sitting on a £500 billion cash mountain, which has caused concern for treasury secretary Danny Alexander.

‘The latest figures reveal that average wages are bumping along the bottom at 0.9 per cent, which is half the rate of the CPI index.’

The GMB yesterday also responded to the devastating news that 2,000 workers face the sack at Wolverhampton City Council.

Karen Leonard, GMB regional organiser, said: ‘Today’s announcement of a jobs cull in Wolverhampton due to the cuts is a devastating blow to GMB members, who now face an uncertain future. Jobs and working hours are under threat.

‘Those who survive the jobs cull can expect a pay freeze, equating to a real terms pay cut, and an ever-increasing workload.

‘GMB officers and shop stewards will be meeting with the council to discuss these cuts in order to protect the interests of our members.’