Outlook It now seems a matter of time before inflation tumbles below 1 per cent.
The price war between supermarkets – so often mere PR campaigns – is actually real this time. The oil price is falling. The strong pound is making imported goods ever cheaper.
But do you get the impression that we are all feeling better off these days? That the low price of the weekly shop means we have more at the end of the week to spend on fun? Hardly.
Even with price rises at these five-year lows, wages have not kept pace. In fact, if you include bonuses, average earnings are still only rising at 0.6 per cent – precisely half the amount that prices are going up. So, in real terms, people are getting poorer by the week.
The economy may be improving from its dismal position in 2008. The queues of the unemployed may be shortening. But what kinds of jobs are people going into? Poorly paid, self-employed, often multiple jobs to make ends meet.
This will have numerous effects: it will pile yet more pressure on companies to cut their prices further – with all the implications for their workforces that implies, it will worsen the country’s financial position as the tax-take dwindles, and will generally undermine the Government’s claims to have saved the economy.
Given Labour’s dismal scoresheet on the economy last time, and the Conservatives’ and Liberal Democrats’ responsibility for the current situation, it seems obvious the working-class poor, most badly affected by the income squeeze, will seek solutions somewhere else at the next election.
A fact of which Mr Farage must be acutely aware.Reuse content