First, the good news. It looks as if some prices might actually be falling. If so, this will be particularly good news for those on lower incomes. That said, the evidence from our own small survey of goods shows that in the past month, whilst 3 items have risen in price, only one has come down.

Year on year, and based on our original 14 items, food inflation is now 24.8%.

A 3p fall in the price of bread does not really compensate for a 20p rise in burgers, a 20p rise in toilet tissue or a 5p rise in lettuce. The nature of prices, as we have repeatedly said in this column, is that, although inflation rates are overall rates across a range of products, price increases are not uniform. Each week some prices go up, most now are staying the same and, very occasionally, a price will go down. 

Prices coming down are important for obvious reasons. If you save money on one item, you can spend it elsewhere. Prices staying the same do not help much if they have already risen beyond your means. And, if those rises continually outperform the falls, then it means that you have to find extra money. Where is this money supposed to come from?

None of this bothers our brilliant and independent national media outlets. Okay, that is sarcasm which I am told is beneath me. The fact is that, as we pointed out in our news item on interest rate rises, the media have an unhealthy obsession with wages as the source of all evil. It is easy to speculate that some of our national editors would very willingly go for a slave society where workers had no rights, no money and, of course, no wages.

For most ordinary workers, their income has a single source: wages. In times of hardship wages are replaced by benefits, and, when we reach the end of our working lives, by a pension (or pensions for the lucky ones). It is hardly necessary to be an economist to work out that, if prices are rising, then, in order to maintain your standard of living, your income (wages, benefits or pension) has to rise. And it has to rise at the same rate as the rise in prices.

So workers asking for wage increases are not an aberration, they are simply a part of a complex system of inputs and outputs that make up what we refer to as ‘the economy’. 

There is a always a sense in which those on benefits are a drain on the rest of us. We are constantly reminded of their low status, and plenty of ordinary people share the assumption that it is somehow your own fault if you are poor, disabled or in an economy where your skills are not valued. That, however, is very short-sighted. It is because the idea of a ‘job for life’ is now virtually redundant that even workers with jobs have to maintain an interest in benefit rates and ensure that they provide a living amount. It is short-sighted for workers who may find themselves unemployed at any time to think that pushing down benefits is a way to balance “the economy”. We pay for benefits through our national insurance contributions, in the same way as we pay for our pensions by deductions from our pay. They are not a gift from the government but simply the return of money we have paid previously. The fact that not everybody needs benefits means that those unable to work for health reasons can be supported by those same contributions. We give benefits to those unable to work because, above all, we are a community. And, whilst that idea may have been eroded, anybody who knows somebody with a long-term health issue will recognise that, even if they cannot get paid work, they can still contribute to the community of which we all form a part.

Whilst figures from the Office for National Statistics (ONS) suggest that the average household income in the UK is £528.80 per week, benefits are capped at £423.26 by government decree. And, just to be absolutely clear, many households will not receive that amount. The state pension is £203.85 per week per person. For a household that contains 2 people, this amounts to £407.70, below the benefit level and below the average household income.

Let’s have a closer look at those household spending figures. The average is clearly not what most people are on. So in a way this is just some kind of indication of how people’s spending priorities might change over time.

For example, in 2021, 17.6% of the average household spending went on housing, fuel and power (which does not include mortgages). We know that fuel and power costs have increased and yet somehow, although we are spending £3 more per week on these items, they are now@ 16.6% of our overall spending. There is no empirical answer to why we are spending less as a percentage, but it would seem to make sense that we are cutting back elsewhere in order to find the additional monies. According to these figures, incomes have risen by 9.7%, but in the same period wages rose by only 4.2%. On average, of course.

The thing which has risen by the greatest amount is transport costs, up from £60.80 to £74.40, an increase of 1.5%. This is probably the rising costs of fuel, allegedly a consequence of the war in Ukraine. Also up are the costs of credit payments, which have risen from £10.40 to £15.20. This is data from 2022 so probably before the interest rate rises had bitten. In other words, when we revisit these figures next year, there is a very good chance that this figure will have risen even further.

Averages are, of course, just that. They are averages, and within an average there can be a huge amount of difference. As a relatively trivial example, a night in a suite at the Savoy in London will cost just short of £16,000. For one night! That is more than some people have to exist on for an entire year. But clearly those prices (and similar ones charged by other ridiculously priced luxury hotels for the rich) are not for the likes of you or me. What they illustrate is that austerity measures have no impact at all on one sector of society.

The newspapers and the TV news will do their utmost to convince you that things are getting better. The fact is that the cost of living crisis is still very much with us. The fact that almost 11,000 people were admitted to hospital suffering from malnutrition in the past year should make us wonder how much those on the lowest incomes have to suffer to not only maintain but to keep improving the lives of the rich.

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