“Record pay rises fuel fresh inflation fears” popped up as an alert on my phone from the BBC yesterday. It was followed shortly after by news that “Mortgage rates soar to highest level for 15 years”. Apparently, wage rises not profiteering cause inflation, whilst mortgage rates just soar for no reason.

Okay, you can’t get the whole story from a headline, but the thought that occurred to me was that these alerts appeared around 8 a.m. when many people would have been on their daily commute or getting the kids ready for school or getting themselves ready for the day. The message is almost subliminal. Wage rises are bad, mortgage rises are a mystery.

The story about wages began: “Regular pay grew by 7.3% in the March to May period from a year earlier…” During that period inflation had reached 11.1%. It is currently 8.7%, the lowest it has been since March 2022. You do not need a degree in maths to realise that 7.3% is less than either 11.1% or 8.7%. Average wages remain below inflation, would have been a more accurate headline.

The BBC is a huge corporation. It employs, according to its latest Annual Report, over 21,000 people. Yet a report on impartiality published in November reported: “We think too many journalists lack understanding of basic economics or lack confidence reporting it.” The report, commissioned by the BBC, found no bias in the economic reporting. No surprise there. But is bias creeping in through incompetence?

When you take the two stories – wages causing inflation and mortgage rates rising – together the subliminal message is that wage demands are causing higher mortgages. This much is hinted at in the report when it says: “Mortgage costs have been soaring recently as lenders grapple with inflation”. If wage rises are bad, then especially bad are strikers.

A BBC report from 4 days ago was headlined: “Teachers’ strike: Pay ‘very difficult choice’ says minister as NEU walks out in England.” The implication here is that teachers striking over pay is very difficult for ministers but giving in to them would be very bad for the economy. And the story tells us precisely why. “He [Robert Halfon, the Education Minister] said the government ‘has a very difficult choice’ to make, saying decisions about teachers’ pay should be balanced against the fact the government has ‘got to spend billions of pounds helping people with the cost of living'”.

What is noticeable is that the BBC, the premier news provider in the UK, does not, in its coverage of inflation, blame profiteering. Or, indeed, even mention it. Blaming wages is not just politically wrong, it rather confirms the report which says BBC staff lack an understanding of basic economics. Wages do not cause inflation, they are a reaction to it. And mortgages do not just increase by magic; they are a reaction to a government policy to increase interest rates. Mortgages are not going up because of inflation; they are going up because in an attempt to control inflation the only measure the government has is to increase interest rates. This will make those with millions of pounds to invest very rich, whilst reducing demand. Reducing demand is a euphemism for sending the economy into a downward spiral so that unemployment will rise and, allegedly, inflation will reduce. (It’s based on the Phillips curve, a discredited but still used bit of economic nonsense popular with monetarists and incompetent BBC economics reporters).

Inflation is only a measure of price rises. What causes prices to rise is not wages, although they could be a factor, but one of two things. Either costs have increased or firms are increasing their rate of profit. We know that for most industries there have been no cost increases, yet we are told that the increase in prices is somehow a consequence of rising fuel costs. Fuel costs, for suppliers, by which we mean the cost they pay before charging you, have not risen, and in fact in some cases, such as gas, are lower now than before the Ukraine war began. According to the TradingEconomics website natural gas has gone down almost 55% in the past year, whilst crude oil has reduced by almost 20%. You might wonder why your fuel prices keep increasing given that energy companies are paying less now for the raw materials than they were?

Multinational companies have used the smokescreen of the Ukraine War to increase prices which have fuelled inflation and given them record profits. All workers have done is asked for wages which allow them to maintain their standard of living. Every below inflation pay rise is an attack on your standard of living. That is why so many people – nurses, teachers, rail workers, civil servants etc. – are striking. And it why Critical Mass stands shoulder to shoulder with them. It is time to stop the profiteering and to give workers, who invest their lives in these industries, their fair share of the rewards.

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