Inflation

Gordon Brown and Alistair Darling endlessly tell us that they are on top of inflation and that it is running to target at around 2%. We all know that the 2% figure that the CPI is currently running at around is an irrelevant figure. As I have blogged before the CPI excludes so much that it is worthless.

I see from the Daily Telegraph that wholesale food prices rose 7.4% over the last 12 months. MySupermarket analysts report that food prices at Tesco, Asda and Sainsbury rose by 12% last year. The Office of National Statistics report that beef, pork and lamb products increased by 3.7% in December alone.

So the next time the government tries to peg a group of workers' pay increase at a generous 2.5% over 3 years, remember what the real rate of inflation is.