The Bank of England
raised rates yesterday (and I would have blogged about this then, but alas shuch things make me extremely busy). CPI inflation is now 25% above target, at 2.5%. My problem is that CPI is an absolute nonsense of an inflation measure, which seriously underestimates price growth, especially relative to the old RPI (
Currently 3.3%), which was the measure used before 1993. This is to the Government's advantage. Interest rates are unnaturally low, causing a continuation of the Housing-price boom and unnaturally high consumer borrowing as a result of lower interest rates.
This is all very well for a while, but the cost of living is increasing vastly quicker than the 2.5% suggested by the CPI. For a start, Fuel costs (£50 to fill up a small car nowadays) are underrepresented in both measures.
Housing costs are also deliberately excluded from the CPI, along with the use of statistical jigery-pokery (geometric means) to lower inflation. Indeed this is the principal difference between CPI and RPI and was introduced at Europe's behest. It is yet another thing imposed on Britian the moment a
Federast gets power, despite the fact that Britain's economy is uniquely sensitive to mortgage payments and interest rates, owing to our tradition of home-ownership, making CPI entirely the wrong measure.
These ignored areas are also (co-incidentally? I think not) the areas the Government has the most control over. Fuel (80% tax), Council Tax, Mortgage interest and so on. Basically the Government can screw money out of us and make us poorer, but when it comes to wage demands, these are negotiated with the inflation rate in mind, so these extra costs are ignored. Earnings are growing at 3.8% or thereabouts - 1.3% over CPI and just 0.5% over RPI. Do you reckon that this covers the extra fuel, heating, cooking, electricity, Interest and Tax that have been heaped on the poor, beleagured British household?
I doubt it. Britons are getting poorer and yet the Government tells us it is doing a good job.
The reason is Mr. Brown. He has increaced money supply, taxed us to the hilt and stoked asset price bubbles. He has transferred more wealth from the (efficient) private sector to the (
inefficient) public sector. The chickens will come home to roost as the BoE will likely find inflation a more intractible problem than previously. The trousers I am wearing cost £7. There's no more commodity deflation from China to offset inflationary pressures in everything else.
When you take into account that which is not measued by CPI - we're fucked. 15% interest rates will be with us again soon, unless Cunt-face Brown mends his ways, tells the
Old Lady to target RPI, not CPI and STOPS FUCKING TAXING US. D'ye hear me, you prick? Your prudence is making us poor. If that's prudence, give me "Tory Boom 'n Bust" every day.