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Britain’s battle against the rising cost of living is proving more tenacious than hoped.
Inflation is falling, but in small steps, from 10.7 percent in November to 10.5 percent. That remains below the Bank of England’s forecast, but is still unacceptably high.
Chancellor Jeremy Hunt won’t be releasing the purse any time soon, judging by his reaction.
Microsteps: Inflation is on track to fall from 10.7% in November to 10.5%. That remains below the Bank of England’s forecast, but is still unacceptably high
Inflation, he tells us, is a nightmare for family budgets, destroying business investment and leading to strikes.
Let’s look at those one by one.
Yes Chancellor, of course families are hurting, but it didn’t stop them from shopping until they stopped over the holidays, poured into the £200bn of Covid savings and used underused credit cards.
Business investment is a bigger concern because it helps determine future output.
But with all due respect, Jeremy, it’s about the government as much as anything else.
The abandonment of industrial strategy, the lack of new nuclear weapons, rising corporate and higher taxes on oil in the North Sea, and delayed decisions on research and development incentives have not helped.
The country must lift its gaze above the inflation demon and envision a brighter future.
As for strikes, you have a point. The unions have been happy to embrace inflation as a weapon against the Tories.
The results in parts of the NHS are so bad, in terms of waiting times and extra deaths, that union actions by nurses and ambulance workers are just something else.
The idea that raising nurses’ wages will suddenly cause people to line up to become health professionals, as Ed Balls, among others, suggests, is fantasy.
Medical school completion times mean jobs in the health sector are inelastic.
The better answer might be to unburden the bureaucracy around immigration. So far, strikes concentrated in the public sector have had remarkably little impact on the economy.
Our vacationers, when border guards went on strike, reported a speedy entry into Heathrow, which put JFK to shame.
WH Smith says turnover at train stations has fallen due to rail strikes, but airports are doing well.
Strikes can be aggravating and the nurses have public sympathy, but they will not bring down the government.
Postponing a solution until the independent public sector Pay Boards come up with a recommendation for 2023 and prices have come off the boil seems like a sensible tactic.
One of the worrying aspects of the latest inflation figures is the 16.8 percent rise in food prices. Food manufacturers have done everything they can to maintain margins and the volume of goods in shopping baskets has shrunk.
Since the cost of food is such a large part of the budget of the poorest, it’s worth a better understanding of whether there is a profit motive.
After all, freight and shipping costs have fallen rapidly and alternative sources of fertilizer have been developed to replace those from Ukraine.
There isn’t enough in the latest price data to prevent the Bank of England from raising rates by a quarter if not half a point next month.
Both Hunt’s governor and the bank, Andrew Bailey, will be well aware that any increase increases the cost of borrowing, not only for citizens but also for the government.
Markets remain unconcerned and the pound reached $1.24, a far cry from parity fears last fall.
Tour
Has the online food delivery industry turned the corner?
It raced away during the pandemic and the stock market rush produced some startling valuations.
Britain’s Deliveroo had a £7.6bn price tag before going downhill.
Dutch rival Just Eat Takeaway went too far and bought Grubhub in the US, only to quickly turn around and write off a whopping £2.7 billion.
It now seems to be on the way back.
It made a profit in 2022 and expects a profit of £197m this year, boosting shares by 20 per cent.
It enjoyed a pick-me-up this week as it signed a logistics deal with Sainsbury’s. Deliveroo shares also received a small boost.
Will Shu, the company’s CEO, has a huge amount of work to do if it is ever to live up to its ambitions when it went public in March 2021.
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