Welcome to Tory Britain

The following was written by Tracy Cooney • @tigs88

Inflation is the calculated increase in the price of goods over a sustained period of time. This means that as inflation rises, you get less for your pound. 

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

For the past decade or so, developed countries tried to keep inflation between 2 and 3%. Inflation is often seen as an indicator that the economy is growing. 

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.

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