Inflation

For the first time in over 30 years the real disposable income of British households is falling, and the degree to which this is happening is increasing as inflation continues to climb. The Office for National Statistics reports that real incomes fell by 0.8 percent in 2010, which is the highest fall in real disposable incomes since 1977. In the first quarter of 2011 it reports incomes fell by 2.7 percent, over three times this amount, confirming that money pressures are growing.

Biofuels crop

Prices now surpass the levels seen at the height of the 2007-8 food crisis. Back then it led to over 30 countries being hit by unrest linked to the soaring cost of food, from Haiti to Bangladesh.

Sugar and meat prices are at record levels, while cereal prices are back at the levels of 2008. Last year saw European wheat prices double, US corn prices increase by more than 50 percent and US soybean prices rise by over 30 percent.

This is the rate newspapers and TV report and on which the Bank of England bases interest rate policy. But it is fiction as far as reflecting the rising prices faced by working class households.

For a start, the CPI excludes mortgage payments and council tax. A second official inflation measure, the retail price index excluding mortgage interest payments (RPIX), also ignores such costs but hit 3.4 percent in January. This is sometimes referred to as the underlying rate of inflation, presumably because it is closer to the truth.

Gordon Brown was more direct than usual in his response to a parliamentary question on the possibility of negotiations in the postal dispute. But he didn't say he welcomed the prospect of talks. "We must... tackle inflation, and people have to accept settlements that will ensure that inflation is low in the years to come," he said. "All workers should look at pay settlements as a means by which we can conquer inflation."