From the TUC

Cost of Living: Time to write a letter to the poorest?

22 May 2012, by Guest in Economics

Today’s inflation figures brought another welcome fall in the pace of price increases. But as earnings growth continues to slow, lower inflation is not feeding through into rising real wages.

As previously noted, the TUC has started tracking the different rates of inflation faced by the poorest 10% of households and the richest 10%. (The post linked to explains the methodology).

As can be seen in the chart below, the poorest 10% have faced higher inflation than the richest since August 2011. This is because they spend a greater proportion of their income on essentials such as food and utility bills, items where prices have been rising faster.

As headline CPI has now fallen back to 3.0%, the Bank of England is once again meeting its target of keeping inflation within 1% of 2.0%. This means there is no need for letter from the Governor to the Chancellor explaining what has gone wrong and what steps will be taken to address this.

But as our analysis shows, the inflation rate for the poorest 10% is still running at  3.7%. Maybe Sir Mervyn should write them a letter to tell them what he plans to do about this?