Unions say workers being hit by double whammy of inflation and continuing pay freezes eroding living standards


Higher food prices are being blamed for what the Bank of England has called a ‘temporary’ rise in the rate of inflation to 3.5%.

The monthly figures from the Office of National Statistics show a rise of 4.6% in prices for food and soft drinks, with other increases in the cost of items from clothes to computer games contributing to the rise.

TUC general secretary Brendan Barber said: “Inflation is not falling as fast as many hoped. With pay growth also weak, families are getting poorer every month.

“Wages have been falling since mid 2010 and the government’s own forecasters are predicting a three year earnings drop.

“You cannot build a sustainable economic recovery off the back of people getting poorer so ministers must do everything they possibly can to get more money into people’s pockets.

“Giving families a few hundred extra pounds in their personal allowance, while taking away thousands more in tax credit cuts is not the way to ease the strain on people’s finances.”

Analysis of recent pay settlements across the private sector puts the majority of increases for the first part of 2012 at 3%.

However, the TUC says wider figures for the whole economy show average weekly earnings grew by just 1.5% in January.

Public sector union negotiators are continuing to demand ‘catch up’ pay awards after successive years of pay freezes or below-inflation rises, coupled with the government-imposed hike in staff contribution rates to public sector pensions.

UNISON general secretary Dave Prentis said: “The pay freeze across the public sector is already hitting hundreds of thousands of families hard.

“Many are struggling to keep out of debt and are cutting back on essentials.  

“They are fighting a losing battle against the double whammy of inflation and the damage caused by pay erosion as a result of the two-year freeze in the NHS extending to three years for council workers.

“It is time the Government realised that their no-hope, no-jobs, cuts-only policies are not working.  We need a Government prepared to invest in growth and with the policies to kick-start the economy and help people back into work”.

The spike in the Consumer Prices Index (CPI) came despite cuts in gas and electricity bills in February.

The Bank of England’s target rate for CPI is 2%. The normally-higher RPI rate – which includes council tax and mortgage interest payments – fell by 0.1% to 3.6%.

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