Thursday, 13 September 2012

Inflation and the rise of poverty...


Amidst all the hand-wringing about poverty and the castigation of the current government for having the audacity to reform the benefits system there is a consistent theme. For sure the typical poverty pundit starts with talk of austerity, with frowny conjecture about changes to benefits and with a side swipe or two at bankers, rich tax dodgers and big business. But then we get this:

...and the extraordinary rise in British food prices – up by 40% since 2005, according to Oxfam – have pushed them into hunger.

And this:

The collapse in living standards means that those who once lived comfortably now worry about filling their cars and those who once scraped by worry about filling their bellies.

The writer (in a depressingly inaccurate and effortlessly polemical way) isn't talking about the actions of government but about inflation. The inflation that means it cost me over £70 to fill the tank of my car the other day. The inflation that has seen the price of some basic foods - bread, for example - nearly double.

Yet our masters - the grand old men in the Bank of England, the 'oh-so-clever' mandarins in the Treasury and the great and good of international finance - tell us there is no inflation. That the problem is quite the opposite - deflation. And while they're saying this (and while the UK's inflation rate continues to be above the target rate month after month eating away at savings, punishing folk on low or fixed incomes) there are queues at the food banks. Queues caused by the Bank's fixation on the deflation that simply isn't there not on the inflation that is.



Curmudgeon said...

And many of those who bewail the level of poverty see more inflation as a way out of our current economic difficulties.

Frances Coppola said...

Do please explain exactly how the Treasury and the Bank of England are supposed to magic away rises in world commodity prices? And rises in VAT and fuel duty?

Simon Cooke said...

Er...the Treasury are entirely responsible for rises in VAT & fuel duty