So, according to the latest reports, the Consumer Price Index of inflation, which the government uses to calculate the health of the economy (and entirely co-incidentally wages) has fallen to a rather less frying-panish 1.8%. Phew that's a load off innit.
However, the Retail Price Index, which is the one which includes stuff like mortgages and council tax, has gone up again to breach the 4.1%. This has led to a bit of a scissoring of the indices:
http://www.statistics.gov.uk/images/charts/19.gif
Yikes! Apparently mortgage repayments are going through the roof (in response to interest rate hikes?) is the main reason, but what's the potential outcome if this tendency continues? The government already seem to be basing their pay increases on the 1.8% figure,. so how quickly is this going to impact on living standards if pay continues to fall so far short of RPI?
Given that the bank of England has been trying to control inflation by the raising of interest rates int he first place, does this mean that what's actually happening is a shift in where the debt is going - people are taking on less new consumer debt but the same amount of money is going out due to the raised mortgages? Is this right? In which case, Aren't they simply shifting the figures around to make it look like everything's carrying on as normal while attempting to strip vast quantities of money away from workers?
