Inflation is, in effect, a tax. A tax on consumption and, painfully, it is a tax on consumption that it is very hard to avoid.
It is getting very expensive to live in this country now. Inflation is 3.7% and the average pay rise in 2010 was 1.9%. Do the maths – the average person in this country is year-on-year 1.8% worse off, and that is on the back of the previous year – a year where many people did not even get pay rises. Of course, the 3.7% does not include mortgage rates, but most people with a mortgage do not appreciate the historically low rates they are paying. So, when the borrowing rate stays the same and other important figures go up, most people feel worse off. Lord Young tried to articulate this b...
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