The Resolution Foundation has detailed the impact on the 6 million lower- and middle-income households in Britain whose average net household income is £20,300 a year and who spend disproportionally more on the goods going up fastest in price. A fifth are now materially deprived and over half have savings worth less than a month\’s wages. Only the seriously better-off are now escaping the squeeze.
This rather surprised me. It\’s a general rule of thumb that the inflation rate for higher earners is higher than the general inflation rate. This is because they both purchase more services (esp health and education) and servic es generally have a higher inflation rate and also that some of what those higher earners buy is positional goods.
These too have a higher than general inflation rate.
So, we actually get the Resolution Foundation telling us that the inflation rate being faced by low to middle earning households is higher than that being faced by those higher earners.
Bit of a puzzle really: how do we get from hte general finding to this specific one?
The answer is in this report.
In October 2008, sharp oil price inflation meant that by far the biggest
year-on-year increases in prices occurred in the domestic electricity, gas
& other fuels (+39.3 per cent), food (+10.1 per cent) and transport fuels
& lubricants (+9.2 per cent) components.
And yes, low to middle income households do spend a greater portion of their incomes on such fuels than do higher earners. So this is how we get our \”squeezed middle\”.
Hmm….but, you see, those huge rises in energy costs are not simply a result of either soaring global prices or of a falling pound. We are actually, quite deliberately, adding to them. The renewables obligation, carbon taxes, the EU cap and trade system, feed in tariffs.
It\’s our own damn government causing this higher inflation rate for that squeezed middle.
Yup, they being screwed over because we\’re going Green.