Economic pundits warned that ordinary working people face a severe drop in their standard of living following the latest “factory gate” inflation figures from the Office of National Statistics.
These include figures that measure the prices of raw materials used to manufacture food, clothes, petrol and other goods. They are now 28 percent higher than a year ago – the steepest such rise since 1976.
Jonathan Loynes of Capital Economics described the figures as “absolutely horrendous” and predicted that the price rises would be at least partially passed on to the high street – threatening a retail slump.
Michael Saunders, chief UK economist at Citigroup, said, “This will mean inflation going up and the standard of living going down. People will suffer, they will spend less.
“This could hardly have come at a worse time. We’ve got these price pressures at the same time as the credit crunch and a housing collapse. Either one in isolation would be bad enough but to have them together is really tough.”
Fears of a crash in the housing market were also stoked up this week as the Halifax building society released figures showing house prices had dropped 3.8 percent compared to this time last year – the largest drop in over a decade.
It is the third month in a row that house prices have fallen.