THE LATEST inflation figure of 10.1% surprised many economists. It won’t have surprised many workers —except that it wasn’t higher.
The Mirror reported on the day of the announcement, ‘Struggling households are now faced with shocking food prices, with cheese 49% more expensive than a year ago, eggs up 28%, sugar 33% and a white sliced loaf 20%.’
‘Last month,’ The Mirror concludes, we ‘paid 19% more on a weekly shop, the highest [rise] since 1977’.
The other main driver of inflation is energy. According to government statistics (ONS) electricity rose by 66.7% last year and gas by an astronomical 129.4%.
Because working class families spend a far higher percentage of their income on fuel and food, for them inflation is much higher than 10%. But this is deliberately obscured by the fog of official statistics.
Yet Jeremy Hunt has the gall to say that rising wages were a ‘significant’ factor driving inflation. He claims the average wage rise of 6.9% is ‘inflationary’.
How can it be when pay is lagging multiple percentage points behind the headline inflation figure? And that’s before you even start to look at the real rise in the cost of living for working class families.
It shows the nurses and teachers were absolutely right to reject this Chancellor’s insult of an offer—less than 10% over two years! After a decade of real falling wages, nothing less than a real cost of living pay rise is ‘affordable’. Add to this the shortfall of over 40,000 nurses in the NHS and anyone can see that nurses’ (and junior doctors’) pay is a major factor in the deliberate run down of the NHS.
Forcing down real wages is what lies behind the Tories’ push to get over-50s back into work and the recently announced benefits sanctions to force the unemployed and single mums back into the labour market. Not because there’s any decent jobs out there, but to increase competition for work so that trade unionists will be afraid to put in for increases that make up for inflation.
The capitalists’ other tool to combat inflation is for the Bank of England to keep raising interest rates. This makes borrowing more expensive. But millions of us are trapped in debts we cannot easily get out of—on credit cards, mortgages, etc. Even renters will face increases as landlords put up their rents to pay off their mortgages.
Although the rate of price increases will likely slow, if energy prices come down, they will remain historically high, if the Bank of England increases interest rates to 5% and keeps them there for a long time.
It is at this point that economists predict indebted companies will start to fail, as the banks refuse to roll over their debts. That means closures and job cuts—unless there’s a fightback.
Stagflation—‘sticky’ inflation and a stalling or even recessionary economy—has returned to Britain. We may be bottom of the league table of western nations, but the whole of North America and Europe is facing a similar crisis.
Continuing wars, the disruption to supply lines and the contraction of world trade caused by rivalry between the great powers and the speeding up of global warming will also impact on the crisis, spelling misery for billions.
This makes the strikes all the more important to win. Two or even three year deals that tie in our best organised and most combative unions to falling real wages would be a disaster.
It is up to rank and file workers, like those behind the successful NHS Workers Say NO campaign, to organise resistance to the union leaders’ sell-out deals. Those currently balloting to strike must vote for action, so we can build the momentum up again.
But this time—in the second wave of strikes—we must force the union leaders to escalate the action, up to all-out indefinite strikes if necessary. We should demand they coordinate their strikes, their demos and their slogans. We must aim to bust the Tories’ economic policy to pieces.