The Bank of England’s response to a spike in inflation – a rise in interest rates – is a disaster for those already living on the edge
When forecasters go on strike, it’s because they know which way the wind is blowing. Unite members working for the National Institute of Economic and Social Research look set to vote to strike over a 2% pay offer, as figures released yesterday show inflation reaching 5.1%. How wise of them to belong to a union, and how wise to use that muscle in the face of further inflation rises. On the old RPI measure, inflation is 7.1%.
It’s not caused by rising pay, which is running at below 4%, but by petrol prices, which have shot up by a third, the fastest on record, and supply shortages affecting everything else: the prices of apples and pears are up by 25%. This new cost of living crisis is causing “acute economic pain”, the Resolution Foundation said following Wednesday’s inflation announcement. It called on the Bank of England not to raise interest rates, with inflation being caused by global prices rather than domestic pay. But today that plea was ignored.
Polly Toynbee is a Guardian columnist
