The following was written by Tracy Cooney • @tigs88
There are 2 indexes used to determine inflation. The consumer price index (CPI) and the retail price index (RPI). Both are made up of a ‘basket of goods’.
Both are made up of things like clothes prices, food, petrol but the CPI doesn’t take housing costs such as mortgages, council tax etc.
Both are compared to the price of an earlier ‘basket of good’ to reach an inflation input.
Inflation in theory should help a government:
- Incentivise people to spend
- Reduce public/private debt
- Give the banks room to reduce interest if needed
- Reduce unemployment
Inflation impacts on many areas of our lives, for example pensions and savings, and since the 2008 recession we have been more aware of it.
We have consistently seen inflation that is higher than the rise in wages, particularly in the public sector where we have seen our nurses, teachers, firefighters and police receiving either a pay freeze or a rise of 1%.
Meaning under George Osbourne ‘many public sector workers are taking home less now than they did in 2010’ (*D.Penman).
Leaving our public sector workers demoralised, disincentivised, and looking for employment in other countries.
While some form of inflation will always be needed in our current economic system, and is not always itself a bad thing, wages must keep up with it and this hasn’t happened under this Conservative government which has oversaw a rise in the cost of living and a reduction in earnings……
Welcome to Tory Britain
*Dave Penman, General Secretary of the FDA.
If anyone would like to write a post for this blog, regarding politics, economics, health or social issues, or on anything that you’d wish to share, then please go to this page for details.