CONSUMER Prices Index inflation rose from 4.0 per cent to 4.5 per cent in April, the Office for National Statistics (ONS), reported yesterday.
‘It’s a constant drumbeat of misery for hardworking families,’ Unison General Secretary Dave Prentis said in response to the figures, adding: ‘Whilst public sector workers pay with their livelihoods and living standards, the bankers are still getting mega pay rises and big bonuses.’
Alcoholic drinks and tobacco rose a record 5.3 per cent in April, air fares rose 29 per cent and sea transport prices rose by 22 per cent.
Claims that fuel prices rose less than a year ago don’t ring true with motorists. They are finding prices up each time they visit the pumps.
CPI inflation is now at its highest level since October 2008 and April was the 17th month in a row that the inflation rate was at least one percentage point above the government’s target of two per cent, forcing Bank of England Governor King to write another letter to Chancellor Osborne explaining why.
In his letter King painted a gloomy picture for the UK economy and expressed his fear of unions moving into action.
He wrote: ‘As set out in my previous letter, the current high level of inflation reflects three main influences: the increase in the standard rate of VAT in January to 20 per cent, higher energy prices and increases in import prices.
‘Although the impact on inflation of these factors is difficult to quantify with precision, it is likely that had they not occurred, inflation would have been substantially lower and probably below the target.’
He continued: ‘Over the past two weeks alone we have seen how quickly commodity prices can change. And there are both upside and downside risks to the inflation outlook.
‘On the upside, the continuing experience of high levels of inflation may push up on inflation expectations, or lead to some resistance to the erosion of real take-home pay.
‘Either of these mechanisms could put upward pressure on wages and prices looking ahead, and imply that inflation would not fall back as sharply when the temporary effects of higher VAT, energy and import prices come to an end.
‘On the downside, however, levels of activity in the economy remain weak – the ONS estimates GDP to be about four per cent below its pre-recession peak in 2008.
‘Unemployment is high and wage growth is weak at around two per cent a year. The MPC is aiming to set policy in order to balance these material risks to the inflation outlook, relative to the target, in the medium term.’
TUC General Secretary Brendan Barber declared: ‘Prices are rising at twice the rate of wage increases, putting real pressure on people’s take home pay.
‘Commuters are feeling the pinch particularly hard, with transport costs up 10 per cent on last year.
‘These figures are made worse by poor profitability and business confidence, which creates a tough climate for pay bargainers.’
