JON REES: From the poor to the rich, to the political parties, who pays the biggest price for inflation?
Prices have risen since the referendum on Brexit last year and as we report below there is more to come with package holidays set to cost us all more, too.
The fall in the value of sterling is key. The day after the referendum, it plunged and inflation has risen sharply ever since as we pay more for imported goods.
Last June, it was 0.8 per cent and last month it was 2.6 per cent with Bank of England governor Mark Carney saying the ‘big picture’ for inflation remains the same despite a slight fall last month.
Prices have risen since the referendum on Brexit last year and as we report below there is more to come with package holidays set to cost us all more, too
But inflation is not the same for everyone and looking at how it affects different groups is key to navigating the currents driving political events.
Stephen Clarke of the Resolution Foundation think-tank, chaired by former Tory Cabinet Minister David Willetts, has published an analysis on this topic.
‘Lower income households spend proportionately more on housing, food and drinks and have therefore experienced higher inflation since the turn of the year. The poorest 10 per cent of households experienced inflation of 2 per cent, by contrast the richest 10 per cent of households experienced inflation of 1.8 per cent,’ wrote Clarke.
He also noted that: ‘Between the middle of 2013 and mid-2014 inflation fell from 2.9 to 1.9 per cent. However, over that period the poorest fifth of households only saw their inflation rate fall from 3.1 to 2.3 per cent.’
These differences might not sound much but when every penny counts, they hurt.
They also account, perhaps, for what happened in the General Election, when the Tories with their long - held mantra of ‘We’re all in it together’ got a shock.
There have even been suggestions that some Tory MPs privately concede that Jeremy Corbyn has a point – that privatisation, for example, has simply made a few people rich while the rest of us pay more for a worse service.
The BBC has form when it comes to overpaying – not on-air talent, but its own executives. Former director general Mark Thompson paid £25 million to 150 outgoing senior executives – millions more than their contracts entitled them to.
I always admired one of them, Roly Keating, who went on to run the British Library and was the only one to give back his payment ‘as a matter of principle’ because he felt it was wrong to accept something which could not be shown to have been properly authorised. Perhaps today’s overpaid ‘talent’ might wish to emulate Mr Keating’s example on the grounds of sheer excess.
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