The copers and the struggling

Evidence is arriving daily that many people are struggling to manage their household finances.

Everyone knows by now that the CPI, the Government's preferred and low measure of inflation, seriously underestimates the true rate of inflation. The CPI currently yields average price increases of 2.5%, while the RPI, the older measure which includes housing costs and council tax, is showing over 4%.

What is happening is that most public sector wage and pension increases are linked to the CPI. So if they are facing just the inflation in costs of the RPI, their real income has gone down by about 1.5%. (In the private sector wage increases are averaging 3.5%, so their real incomes have also fallen.)

In fact most of us will also be facing tax increases, especially those on low incomes who have lost the 10% tax band.

The impact falls heavily on the poorest and the elderly because of the rise in basic items such as food and fuel and power costs. The RPI is calculated for an average family, and not for those for whom housing, fuel and food costs represent a major part of their income.

Items which have risen rapidly in price over the past year include:

The average weekly shopping bill for a family of four has risen by about £12 (- £572 annually from the Daily Mail calculation.)

Fuel costs have risen by about 30%.

Milk, cheese and egg prices have risen by approaching 20%, those of butter and other fats by 16%, while bread and cereal prices have risen by approaching 10%.

Recent calculations by the Conservatives and released last week, indicate that an average family
will pay £1,400 more in bills this year than before. Pensioners and others on low incomes will find their increase smaller than this, but on their incomes their bills will be proportionately higher.

When he introduced the (Nu)Labour campaign for the May Elections, G.Brown described his party as being "on the side of ordinary people".

With friends like this, who needs enemies?