/ Money

Inflation tops 4% – are you feeling the pinch?

Inflation going up chart with coins

Inflation’s hit 4% – its highest since 2008. Blame points to high petrol prices, train ticket rises and the new VAT rate. Of course, it’s bad news for all of us, but it could be worse – honestly.

I bet even Madness frontman Suggs doesn’t like driving in his car these days. Who can blame him. Petrol prices are a nightmare. I’m almost tempted to pour a cocktail of cola and vegetable oil into my fuel tank.

Everyone’s pointing the finger at the VAT man, and sure the new 20% rate isn’t helping matters, but I don’t buy into this particular blame game. Bank of England governor Mervyn King sounded like a wounded football manager when the 4% inflation news hit. Well, tough Merv, you’ll get over it, unlike the rest of us.

Tough times ahead

The bankers may be set to forgo their bonuses, but it still looks like they’ll get a tasty salary bung. As usual, it’ll be those of us outside the Square Mile who’ll feel the pinch.

Let’s put it this way, you want a pint? You’d better hope that the ‘last orders’ bell rings soon, because the cost of a drink is going through the roof.

Fancy a holiday? Forget it, the cost of flights are soaring, and the likes RyanAir will stitch you up if you pay by credit card (as if there’s any realistic option). Can’t afford to fly? Well, forget driving to a camp site, the petrol prices will hammer you.

Losers, and some winners

I hate to say it, but with inflation at 4% (and rising) there are no winners outside of the City.

That said, back in the 1970s inflation regularly topped 15%. And while petrol prices are a bitter pill to swallow, at least the cost of footwear has only risen by 1.3%, so at least it’s relatively cheap to walk to work.

Pickle says:
18 February 2011

I suppose it had to happen – commodities from abroad are rising in price and this is reflected in prices in this country. We are back to wartime conditions – Those of us who remember them will be able to survive – the rest will have to grin and bear it.
If we pretend we are still rationed as in wartime we can keep costs in reasonable limits. Come on the oldtimers and tell us how you did it…..

Sorry Pickles – This is NOT Wartime conditions – Though Condem Cameron is spouting “We’re all in this together” which is rubbish.

You see – We all had ration books because all food was difficult to get.for everyone – Everybody had the same rations (theoretically). The rich could buy Black Market goods – but this was ILLEGAL for everybody and could be punished by prison.

However we could AFFORD the rationed goods – so when – not if – they were available – we queued up (often for hours) to get our share. The food was balanced though starchy – Clothes were not fashionable but utilitarian and hard wearing. But as lifestyles were far more active the starch was burned off in work – and why we were actually fitter than the obese nation of today.

We WERE in this together – there was a virtual; equal chance in any given area to be killed by bombs irrespective of income and class.

Now many people cannot afford to BUY food because other expenses take their income.

Consider this – single state pension £97 a week – static expenses often leave around £10 to £12 a week for food. The only meat affordable is battery chicken. The OAP cannot afford to BUY food and rent and heat a room. Please don’t state that means tested benefit may raise that pittance to £132 a week – Because it totally ignores those OAPs were actually promised a “living pension” and it was until Thatcher removed the link to average earnings – and if the link was still there the pension would be £132 a week without means testing. Now if you know anything about the appalling pre-war means testing you will know why such pensioners will not be means tested. I am one of them.

It is similar for those on minimum wage – provided they can get a 40 hour week job – Rent in my area between £400 to £1000 a month if you can get a flat – Income £1120 a month. (£7 p hr) That leaves very little to live on.

In the war rent was controlled and affordable.which meant that a smaller percentage of income was spent on rent (one reason why cinemas where always full we could afford to pay to be entertained.) A vast number now cannot.

In the war – jobs were easy to get – vast shortage of manpower – and overtime was equally easy. So income was comparatively high. Now jobs are no longer easy to get – and will get worse.

There is no comparison between the war – where we were all working together – and suffering equally – to the Tory imposed austerity which hits the poor and supports the rich. Please take your rose tinted specs off! 🙂

longley shopper says:
22 February 2011

Absolutely right Richard: very well said!

My mum (82 years young) could have written your script there as it’s almost word for word what she keeps telling all who willl listen.

Inflation for my family is about 7%, according to the BBC inflation calculator. Pay is frozen – we’re told we’re lucky to have jobs. There’s no feeling that we’re all in this together. When you know that Nick Clegg’s school fees were approximately equal to today’s national average wage, you know that our government has absolutely no idea what “we’re all in this together” means. At any time they can move on, as can bankers. Thos causing high inflation seem to be immune from any regulation to cause costs to fall.

A return to Victorian values.

longley shopper says:
22 February 2011

I bet Maggie is so proud of Nick and Dave: probably more proud that she is of her own two!

Slogan should be ‘you’re all in it together’ not ‘we’. We don’t have to go back to the war for high inflation, high unemployment, high homelessness and high interest rates. We had all these in the 1980,s and I fear we are heading there again. In comparison 4% inflation is low. Just wait until the Tories really get going.

The deficit has to be addressed but these severe cuts are like trying to pay back a 25 year mortgage in 5 years. I suspect we are in for an extremely tough time, far worse than most are saying, and the brunt of the pain will be be felt by the less well off.

Losjkie says:
23 February 2011

Constantly being screwed down. Pay freeze in the public sector for those earning 21k plus. No overtime since last April, asked to do tasks that relate to a higher grade than me. Paid to use my private car for work at the OUTDATED HMRC rate of 40ppm 25p after 10000m so realistically i am ghetting about 37p per mile.(rate set 2001?). This involved driving over rough rural roads carrying equipment.
Living costs up, food, heating, VAT and most everything else.
Saving rates poor.
So yes feeling hard done by. Not too sure about blaming the current Gov though. They picked up the broken pieces from the previous Labour lot who quite evidently went on a spending spree prior to losing power.

fedupwithcondems says:
25 February 2011

So, Losgkie you think spending on education, social welfare and the health service was just a spending spree for the last government? You may be eating your words soon, especially if you need to go into hospital!

Terence Flanagan says:
24 February 2011

I seem to remember that inflation was at one time in the 70s more like 25% than 15%. Am I correct?

Yes. The average through the decade was 13% but it peaked at 25% in 1975. I’d just started work and it wasn’t nice, I can remember having a mortgage at 12.5% so seeing people panicking over 4% or even 7% is a little bemusing.

The effect on industry was even worse of course.

Terence Flanagan says:
24 February 2011

I seem to recall that inflation in 1970s hit about 25% rather than 15%

The Government has created most of the 4% inflation in costs through devaluing sterling (via artificially low interest rates), resulting in higher import costs, VAT increase, fuel tax increase and green taxation on energy.This is deliberate policy to help melt away the deficit.

The privatisation of the Public Sector is Tory ideology but will keep wage inflation down. I expect we will have another three years of pain before there is a feel good factor introduced just prior to the next election.

Terry T says:
14 March 2011

When you say that “inflation tops 4%” you are using the governments preferred index – CPI. The true cost of inflation as measured by the RPI is 5.1%. So we are feeling the pinch even more!

Paul says:
24 March 2011

My savings are averaging 3% on which I pay tax, and inflation is up to 5%. As a result, I cant spend as much as I did, and everyone suffers. Why dont the Government offer a decent savings product? It would put money back into the economy, and bring the debt ‘in house’.