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Tough Times Ahead

Charities have warned that more Scots will be forced into poverty by soaring prices after the Governor of the Bank of England said inflation could reach 5% by the end of the year. Mervyn King said Britain faces a long slow recovery from its financial woes. Families and pensioners will be among the worst hit as fuel, food and clothing costs soar should the prediction by Mervyn King come true. With consumer spending being squeezed and wages failing to keep pace with the rising cost of living, charities believe many families and pensioners will be the worst hit.

The Child Poverty Action Group in Scotland claimed many children could suffer as parents struggle to make ends meet. “If prices continue to rise, we’re going to see a significant increase in child poverty and this is going to have an impact on factors such as children’s health and education outcomes. Families are really struggling as living costs are rising rapidly and incomes aren’t moving to match them. Lots of families are wor…

Travellers Beware

According to the AA the average price of a litre of fuel in Britain will rise from £1.26 to £1.30 on January 4. American householders are now typically paying a fraction of the price at just over 50p a litre, according to the latest figures. And EU figures show fuel prices in Britain have been the highest in Europe. This time last year petrol was at £1.08 a litre and diesel at £1.09. In Stornoway, the typical price of a litre of unleaded will go up from £1.37 to over £1.40 with diesel up from £1.39 to £1.43.
Luke Bosdet, of the AA, said: “The facts are that fuel is being taxed like a luxury item such as champagne. But it is a necessity for everyone, from the youngster starting his first job, to volunteer drivers, to cabbies, and lorry drivers. The duty on fuel is an unfair tax as it hits everyone the same. There is no means-testing built in so it affects people that can least afford it. Enough is enough.”


Inflation-busting rises in rail fares took effect yesterday with some mainline se…

Council workers in strike action

Up to 150,000 council staff in Scotland staged the second 24-hour strike over pay in two months. Schools, ferry services and rubbish collections are being disrupted as members of the Unite, Unison and GMB unions take part in the action.
It comes after the rejection of an amended offer from local authority umbrella group Cosla to change the 2.5% pay offer from three years to one year. The unions are calling for a 5% increase in line with inflation. Matt Smith, Unison's Scottish secretary, said he was impressed by the turnout for the strike and threatened more industrial action if the dispute continued.
Members of the Socialist Party participated in this walk out, just as ordinary workers who are union members.We reject any notions of wage increases 'ever' being the cause of inflation.Wages always play 'catch-up' with inflation.There is over a century of socialist writing on this subject which can be accessed on the SPGB website, as this search will show.

Worse to come 2

And further to the previous story, another report describes how pensioners have seen the cost of the goods and services they use soar by more than a third during the past 10 years, research has showed.The rate at which the cost of living for pensioners is rising outstrips increases in Retail Price Inflation, which has risen by 32% during the past decade compared with a 36% jump in inflation experienced by pensioners.

Martin Ellis, chief economist at Clerical Medical, said:
"The average cost of living facing pensioners has risen by more than one third over the past decade.The cost of living for pensioners has increased by more than that for all households during the period, particularly in the last five years."

Worse to come

While MPs vote to retain their 2nd home additional expenses allowance of 24,000 pounds , it was revealed that the spiralling cost of living has left Britons 15 per cent worse off than they were five years ago, according to research published. Households were now left with an average of £772.79 to spend each month after paying their fixed monthly outgoings – down from £909.84 in 2003. The report found fixed monthly household costs had soared by nearly 45 per cent during the past five years, to take up 53 per cent of people's total pay. Homeowners were shelling out 78 per cent more in mortgage repayments than in 2003-4 at an average of £735 a month, due to a combination of higher interest rates and people taking out bigger mortgages.Monthly energy bills have leapt by 110 per cent during the period to an average of £95.80, while petrol costs for the typical family are 29 per cent higher at £193.61.

"Many UK consumer segments are feeling the pinch as big rises in household costs …

Getting along wih less to go on

Average families have seen their disposable incomes drop by £8 a week in the past year, research suggests.

Although earnings rose by £23 a week, or 3.6%. that was outstripped by taxes, which rose 6.5%, and higher bills for essential items such as food and fuel. This week government figures showed that higher fuel and food bills had driven annual inflation to its highest level for 11 years.

The governor of the Bank of England, Mervyn King , also warned that real incomes would stagnate this coming year.

The Centre for Economics and Business Research said the average family had an income of £633 a week, which was 3.6% higher than May 2007. However, it found taxes and national insurance had risen by 6.5% over that time. Adding in the effect of more expensive essential spending - such as transport fares, utility bills, food, clothes and housing - meant that these families now had, typically, just £131 left to spend on other things - a drop of 6%.

Food Prices Rise

The Socialist Courier has already reported here about the rise in the world prices of food but today's Herald carried an article on the local effects .

Families are paying record prices for food after costs soared in the year to February, with a rate increase exceeded only by fuel costs.

Annual food product inflation has reached 8.4% - the highest since records began in 1986 - according to the Office for National Statistics . Meat prices were the main culprit of spiralling costs as fresh and preserved meat prices rose 5.5% from January to February.

Food manufacturers such as Hovis bread maker Premier Foods have been labouring under rising wheat costs. Imported cereal product prices are up more than 6% over the month and surging by almost 47% in the year to February.

Running forward to stand still

The average household is £5 a week worse off than last year. The cost of living rose by 4.9 per cent to £388 a week. Earnings also increased but soaring bills for essentials such as food and transport mean that disposable income has fallen to £138 a week according to research by the Centre for Economics and Business . the charity Credit Action, said:
“When you add together the increases in grocery bills, energy costs and the fact that all credit is getting more expensive, it means that the real cost of inflation is far above the Government’s measure."

CEBR carried out the research on behalf of the supermarket group Asda. It found that the average family had to pay 6.1 per cent more for food in January compared with January 2007, and 6.4 per cent more for transport. Petrol prices were nearly 20 per cent higher. Only a 4.8 per cent fall in the cost of clothing helped lessen the pressure on consumers’ wallets. Households in Wales have been worst affected by spiralling costs, the CEBR …

Keeping a roof over ones head

House prices are now six times the salary of the average Scot, according to new government figures revealed yesterday.
The statistics show that the average house price of £137,192 is running out of reach of the £22,261 median salary.

First-time buyers with little or no savings are being faced with debilitating interest rates as the industry recoils, and many young people can't buy without parents' help. The pressure on those with low incomes was highlighted by one case where a couple with a joint income of £26,000 were paying £700 a month in mortgage repayments.

Don Fleming, of the Mortgage Advice Network said in one instance a lender was offered a 95% mortgage and as soon as the papers were signed a further 30% loan was offered as a top-up because the person was then classed as a property owner. He said: "Lenders were calling it flexibility, but what they mean is they are pulling the wool over society's eyes. Government should have stepped in to stop people receiving la…

The property ladder

Research by the Bank of Scotland, found that young people faced a financial struggle to own property, with the average price paid by first-time buyers soaring 113% from £57,929 in 2002 to £123,213 this year. With the threshold set at £125,000, many first-time buyers paying more than the average price of £123,213 will have to find an extra 1% of their property price on stamp duty.
The average property is now out of reach of first-time buyers in 95% of places, according to the fifth annual First Time Buyer Review. Edinburgh and Helensburgh are the least affordable places for first-time buyers and properties there are 8.2 and 7.5 times the average income of a first-time buyer household. The deposit required by first-time buyers has soared 238% since 2002 and the average amount put down for a first property in Scotland is £25,951 - 95% of an average full-time worker's salary. Five years ago it was only 35% of an average worker's full-time earnings.

"It is beyond the reach of pe…

Declining Wages

There is a maxim often espoused by apologists of Capitalism - that a rising tide lifts all boats , meaning that a bountiful capitalism will benefit all sectors of society , not just the capitalist class .

But where is the proof of the pudding.

Profits at British companies are growing at their fastest pace in nearly 13 years while wages of ordinary workers are rising at their slowest pace since 2002, official data showed today.

Office for National Statistics said profits increased by 16.2% in the second quarter of the year compared with a year earlier. That was the best figure since the final quarter of 1994, the profit rise was widespread across different types of company.

Meantime

Wages rose by a meagre 3.6%, the worst pace of growth since the first quarter of 2002.
And inflation - rose to 3.8%, the highest in more than a decade .
So in real terms we are 0.2% worse off

Darren Winder, chief economist at stockbrokers Cazenove said that the cash position and balance sheet of British busine…

Days of Cheap Food to End

Mark Hill, food and agriculture partner at Deloitte, the accountancy firm , warned that rising demand for wheat and maize was bound to result in increases in the price of staple foods. The era of cheap, subsidised food, which had lasted since the war, was over, he said. We are going to see sustained price inflation - a general upward trend for staple foods such as grains, milk and meat.

The price of milk, poultry and pork is also expected to increase because of a rise in the cost of livestock feed . Wheat and maize prices are at their highest level in more than a decade.

The growing trend of turning wheat and corn into alternative fuels had come at a time when stocks had been run down. Grain supplies were already under pressure as a result of bad weather that reduced harvests and pushed up prices last year. Population increases and growing affluence in China and India could double global grain consumption within the next 40 years.

We are getting poorer

Disposable income has fallen to a five-year low, according to a study by Ernst & Young.

Big rises in household costs continue to outstrip wage increases .

Average monthly mortgage repayments, typically a household's largest monthly outgoing, have soared 65% in the last four years, and are up 12% in the last year alone.

Also seeing above inflation rises on a host of fixed costs such as council tax bills ( Up 20% since 2003/04 for a band D property) , water rates, pension contributions and petrol (11.7% higher than last year)

Household bills have risen by 31% since 2003/04, and now account for more than 50% of a typical household's gross income, up 5% in the same period.

Loans, credit cards and overdrafts have soared more than 30% in the last four years, with the average unsecured debt now standing at £8,028 - compared to £6,568.

The average British household now has £837.53 disposable cash to spend each month after total fixed outgoings.

Rich List and P*ssed

With the imminent publication of The Times 2007 Rich List , there will be many commentaries on it . The first i have read is from the BBC .

The fortunes of Britain's wealthiest 1,000 people grew 20% in a year .

The UK Office for National Statistics reported that average UK earnings including bonuses rose by 4.6 % in the year to February 2007 . Average earnings excluding bonuses on regular pay, rose by 3.6 % . The retail price index measure of inflation stands presently at 4.8%.

The £19 billion fortune of Indian steel magnate Lakshmi Mittal ensured he kept his title as Britain's richest person. Mr Mittal's fortune grew more than £4 billion from from £14.8 billion in 2006 . The Duke of Westminster fortune grew from £6.6 billion to £7 billion.

Once again , the figures irrefutably confirm that the capitalist class are becoming increasingly richer and the working class are growing poorer and poorer .