Five questions answered on the latest inflation figures

Fruit, bread and cereals up.

The office of National Statistics today released its most recent inflation data. We answer five questions on the current state of inflation.

What is the current rate of consumer price inflation?

For November inflation remains unchanged from the previous month at 2.7 per cent.

How does this compare to wages?

Over the past year inflation has risen faster than wages with the average monthly income £22 lower than last year, according to a Bank of England survey by NMG Consulting.

What’s risen and what’s fallen in price?

Petrol prices have fallen by 3 per cent a litre on the month to £1.35 while diesel prices dropped 1.5p to £1.42 a litre.

Retail prices index (RPI) inflation, which includes housing costs, fell to 3 per cent last month, from 3.2 per cent in October.

The main rises came from food and non-alcoholic beverages prices which rose by 1.1 per cent between October and November. This covers fruit and, to a lesser extent, bread and cereals were the main contributors.

Housing and household services, such as gas and electric, rose overall by 0.6 per cent between October and November,

What’s the outlook for the future?

According to economists inflation could rise again next year to over 3 per cent as the full effect of the fuel price hikes and rising cost of fuel are factored into the figures.

UK economist at IHS Global Insight, Howard Archer, told The Telegraph: “It still looks very possible that increased energy tariffs and higher food prices could push consumer price inflation up to 3pc early in 2013 and keep it there for a while. Further utility price hikes will kick in during December and January.”

What is the government doing about inflation prices?

A Treasury spokesman told The Telegraph:

“At the Autumn Statement, the Government took more action to help households with the cost of living including a further increase in the tax-free personal allowance and cancelling the fuel duty increase that was planned for January.”

Fruit prices are a major riser. Photograph: Getty Images

Heidi Vella is a features writer for

Photo: Getty Images
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Autumn Statement 2015: George Osborne abandons his target

How will George Osborne close the deficit after his U-Turns? Answer: he won't, of course. 

“Good governments U-Turn, and U-Turn frequently.” That’s Andrew Adonis’ maxim, and George Osborne borrowed heavily from him today, delivering two big U-Turns, on tax credits and on police funding. There will be no cuts to tax credits or to the police.

The Office for Budget Responsibility estimates that, in total, the government gave away £6.2 billion next year, more than half of which is the reverse to tax credits.

Osborne claims that he will still deliver his planned £12bn reduction in welfare. But, as I’ve written before, without cutting tax credits, it’s difficult to see how you can get £12bn out of the welfare bill. Here’s the OBR’s chart of welfare spending:

The government has already promised to protect child benefit and pension spending – in fact, it actually increased pensioner spending today. So all that’s left is tax credits. If the government is not going to cut them, where’s the £12bn come from?

A bit of clever accounting today got Osborne out of his hole. The Universal Credit, once it comes in in full, will replace tax credits anyway, allowing him to describe his U-Turn as a delay, not a full retreat. But the reality – as the Treasury has admitted privately for some time – is that the Universal Credit will never be wholly implemented. The pilot schemes – one of which, in Hammersmith, I have visited myself – are little more than Potemkin set-ups. Iain Duncan Smith’s Universal Credit will never be rolled out in full. The savings from switching from tax credits to Universal Credit will never materialise.

The £12bn is smaller, too, than it was this time last week. Instead of cutting £12bn from the welfare budget by 2017-8, the government will instead cut £12bn by the end of the parliament – a much smaller task.

That’s not to say that the cuts to departmental spending and welfare will be painless – far from it. Employment Support Allowance – what used to be called incapacity benefit and severe disablement benefit – will be cut down to the level of Jobseekers’ Allowance, while the government will erect further hurdles to claimants. Cuts to departmental spending will mean a further reduction in the numbers of public sector workers.  But it will be some way short of the reductions in welfare spending required to hit Osborne’s deficit reduction timetable.

So, where’s the money coming from? The answer is nowhere. What we'll instead get is five more years of the same: increasing household debt, austerity largely concentrated on the poorest, and yet more borrowing. As the last five years proved, the Conservatives don’t need to close the deficit to be re-elected. In fact, it may be that having the need to “finish the job” as a stick to beat Labour with actually helped the Tories in May. They have neither an economic imperative nor a political one to close the deficit. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.