Slight inflation drop 'won't help workers'

The consumer price index (CPI) rate of inflation fell to 2.5 per cent in August, from 2.6 per cent the previous month, the Office for National Statistics (ONS) said.

Lower clothing costs and utility bills pushed inflation down inflation but higher prices at the pump mean inflation is unlikely to fall as fast as the Bank of England had hoped - maintaining the squeeze on struggling households.

A Treasury spokesman welcomed the figures, saying: "Inflation coming down is good news for households and business. The rate of CPI inflation has now more than halved since its peak last September, bringing welcome relief to budgets."

But left economists rounded on ministers, pointing out that wages were still not rising fast enough.

Professor Roger Seifert told the Star: "Inflation, its causes and consequences, is always a class matter - workers play catch-up between wages and prices, and in a recession that is harder without concerted action through organised labour.

"Greater collective bargaining would mean wider and deeper union action to restore wage levels, thus pumping money into every town and city in Britain, reinvigorating the labour movement and delivering a bottom-up people's recovery."

And Professor Prem Sikka questioned how credible the figures were.

"Ordinary people have seen transport, food and energy costs go through the roof and bear no resemblance to the ONS figures. It is time to reconstitute the index," he said.

"Even with these low figures, the living standards of many people have been eroded as people face wage freezes and welfare cuts."

Outgoing TUC general secretary Brendan Barber said: "Real wages have been shrinking for nearly four years now and the prospect of an ease in living standards any time soon looks remote.

"The combination of low wage growth, higher indirect taxes, in-work benefit freezes and tax credit cuts add up to an unprecedented attack on the living standards of low-paid workers and their families."

johnm@peoples-press.com