The cost-of-living conundrum
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Why falling inflation isn’t ending the crisis.
By Tom Clark
Last week, we learned that inflation had been safely steered back to 2%, precisely in line with the Bank of England target. Everything, then, is back under control. We can safely draw a line under the ‘cost-of-living crisis’. Right? Sadly, nothing could be further from the truth.
What matters for securing the absolute basics in life – food, shelter, heat and so on – is not a general price level (which is also affected by the prices of luxury holidays, fancy restaurants and the bill for domestic staff) but the costs of those very necessities. The rise in private rents is sharp and ongoing; they continue to climb not by 2%, but nearly 9% a year. Energy bills may now be falling, but from such a ludicrous peak that they are still up around 60% on three years ago. Food, meanwhile, is up by around 30% over the same period.
Set all this against what’s happened to incomes at the bottom end of the scale, and the gap is stark. For po...
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