Inflation: Hitting the Poorest Hardest

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Inflation: Hitting the Poorest Hardest

Post by Rev Scare on Fri May 20, 2011 5:31 pm

Inflation was persistently high throughout 2010, with an average RPI of 4.6% - the highest since 1991. Meanwhile, the CPI has been above 3% for the last 15 months, a whole percentage point above the Bank of England’s 2% target, prompting Mervyn King, the governor of the Bank of England, to write a total of four letters to George Osborne, the Chancellor of the Exchequer, explaining the causes for such consistently high inflation.

With many public sector workers facing a wage freeze for the next two years and with an average growth in earnings of just 2.1% overall, it is clear that working class families are being hit extremely hard as they see wage reductions in real terms due to inflation. VAT (a regressive tax on consumption) has recently risen from 17.5% to 20%, and the price of fuel is surging. It is predicted that inflation could continue to rise to over 5% or more in the near future.

A number of strikes have already broken out in the private sector over the attempts of the bosses to impose wage freezes, such as at the Perkins engine factory in Stafford and the GlaxoSmithKline Ribena factory in Gloucestershire. A full time official for the GMB trade union in Stafford said that, “In 2011, 2012, I think we will see unrest...People are tired of the constant pressure on wages, pensions and conditions”. Jason Piers, a worker from London commenting on the BBC website, said:

“The general public have paid through the nose because of the banks' failures. Now they are going to suffer due to the restrictions in place on the public purse. They have had a VAT increase, are paying almost 25% more for fuel this year than last and now they want us to pay more for our mortgages. It's the banks and financial institutions who are profiteering from speculators on the oil, food and money markets. They should be hit first and not the general public”. (BBC website – 18th January 2011)

http://www.marxist.com/inflation-hitting-poorest-hardest.htm

Inflation is an interesting topic within the context of neoclassical economics, as its importance is only due to capitalism. If wages were to rise in proportion to the rate of inflation (which, of course, they do not), the effect upon the lower classes would be minimal—at most, a nuisance. Whenever the government does decide to combat inflation as an odious menace, it is due to the compelling efforts of the financial sector, which stands most to lose from the devaluation of currency.

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Re: Inflation: Hitting the Poorest Hardest

Post by AlbertCurtis on Fri May 20, 2011 10:52 pm

The entire system is rigged to put the burdens upon the poor and ensure the benefits go to the wealthy, it is not just inflation, but deflation, tariffs, taxes and everything else. I am convinced that ONE real big step to end this would be to simply issue NON-interest bearing notes as legal tender and to form 'citizens' banks' that would loan this out at a very low and very long term rate. This would ensure that money would be there to use, but that money would not be master over the man. It just seems 'off' that we pay debt PLUS interest on money simply for it being created and before it is ever even used! And that that money goes first to the wealthiest, whose use of the money ensures the inflation for the rest of us.

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