Last week the UK’s latest inflation figure for March 2023 came out at 10.1% year on year. Whilst this was down from the 10.4% in February, it was still higher then the markets expected, who had predicted 9.8%. It is also well above the “target” of 2%. I remember when that 2% was a ceiling!!
The culprit remained energy prices, which were 40.5 percent higher last month than a year earlier.
UK inflation is persistently high
This fed into food prices which shot up 19.1 percent on an annual basis, the sharpest such rise since 1977. The retail price index (RPI) was 13.5%
When our central bankers and politicians speak of stable prices, what they mean is that there is a situation in which inflation is enough to eat away at people’s incomes (a stealth government taxation), but not at a rate at which people take much note.
The situation in the UK is that the price rises are palpable. The vast majority of the people in the UK can see the price rises every time they go shopping. Delay buying a product by a month can see the price increase by 10% or more.
As a result there has been a sharp increase in strikes by British workers. This has included key workers such as doctors, nurses, civil servants and teachers. The British courts however, quashed the nurses strike recently.
Other workers like the train drivers have said they will be launching strike action soon if a pay rise of 7% is not awarded, which looks unlikely as the UK government has pressured the train operators to renege on their initial 9% offer. Meanwhile even traffic wardens in Westminster are striking during the coronation.
All in all over half a million workers are demanding better pay and engaging in some sort of strike action as inflation continues to remain persistent – or sticky!
Mark Serwotka, General Secretary of the Public and Commercial Services Union (PCS) said yesterday;
Our members are on strike today because they are very angry that the government seems to have singled out it’s own workforce for the worst treatment of anybody in the public sector or across the British economy.
The question is whether, under inflationary pressures, the Bank of England will push interest rates up even further when it next meets on 11 May. This will be in response to the higher than expected inflation combined with what they consider to be strong employment figures. However, like in many advanced industrial nations many full time decent paying jobs have been exchanged for lower paying part time jobs, with many having several jobs to make ends meet.
The Bank of England will of course be following in the footsteps of the Federal Reserve. So if they put up rates then so will the BofE. However, if the Fed pauses their interest rate rises it will be interesting to see if the UK follow suit or in fact break from the Fed. If they do break it will be yet another signal that the world is unpegging from the dollar.
Much to the government’s dismay, and denial, the IMF recently predicted the UK economy will contract by 0.6% this year, which they then upgraded to a contraction of 0.3%. Performing worse than sanction-hit Russia. Truly the sick man of Europe.
Of course the fault of this all according to the BofE top economic’s advisor, Huw Pill, is the British worker.
Huw Pill, former Goldman Sachs employee
He told the nation that workers need to accept being poorer:
Somehow in the UK, someone needs to accept that they're worse off and stop trying to maintain their real spending power by bidding up prices, whether through higher wages or passing energy costs on to customers etc...What we're facing now is that reluctance to accept that, yes, we're all worse off and we all have to take our share; to try and pass that cost onto one of our compatriots and saying: 'We'll be alright, but they will have to take our share too'.
Yet, the true burden of increased costs, especially food costs, is borne overwhelmingly by the poorest sections of society. All those millionaire rich cats that sit in the cabinet and the CEO’s of large corporations are barely affected, if at all.
Of course it’s always easy to blame striking workers for inflation. Nothing to do with ill conceived sanctions on Russia, the ongoing costs of Covid and the unprecedented lockdowns. Nobody must even mention the QE and the ongoing collapse of the British currency hidden by the precarious state of all the fiat currencies globally.
If the British economy avoids a sharp stagflation it will be a minor miracle.
