I was always a bit wary of über-Tories or Cameroons saying in response to Labour’s “cost of living” rhetoric that, ah, wages will soon outstrip inflation and that will shoot Miliband’s fox! As if we’ll all going to feel like millionaires as soon as that happens.
Well, today it has happened. Using CPI, which I find dodgy as it doesn’t taken into account housing costs (why on Earth not?), the Office for National Statistics calculated earlier this month inflation was 1.6% in the year to March. RPI (which does include housing) was at 2.5%. Today, figures were released showing wages in the three months to February grew at 1.7% .
Putting aside the lack of direct comparisons between the figures the ONS is bandying about, yes wages are now outstripping one level of inflation. But do you feel like that is the case? Do you feel you have more in your pocket after bills and paying for things like, err, food. Nope, me neither. And there is a good reason for this. Wages are no where near the level they were before the crash in 2008 and the Great Recession started. As respected Sky News Economics Editor, Ed Conway, says, wages are now around 8% lower than they were in 2008. The Office for Budgetary Responsibility (an independent public finances watchdog set up by the Coalition Government in 2010) predicts wages won’t actually get back to pre-2008 levels until 2018 – FOUR years away.
Which, as always in politics, means the cost of living is not a black and white issue. The same über-Tories go around saying Cameron will win in the 2015 Election if he has asks the question: “Do you feel better off now than in 2010?”. Well, based on the OBR prediction, the answer will be “No”. Perhaps, Ed Miliband’s “cost of living” rhetoric has some gas left in the tank yet.