Britain’s inflation rate fell to 2.6 percent in the year to June, helped by lower food and fuel costs. Ministers will present the figure as evidence that the cost-of-living crisis is easing. But slower inflation doesn’t mean prices have returned to where they were. It only means they’re rising less quickly.
Workers are still paying today’s inflated prices. A small fall in the rate of increase doesn’t restore the living standards already lost.
Food and non-alcoholic drink prices fell by 0.2 percent between May and June. Sugar, chocolate and confectionery recorded the largest monthly fall, while annual inflation also slowed for beef, veal and edible offal. Pizza and quiches were 6.7 percent cheaper than a year earlier, and margarine fell by 1.9 percent.
Fuel prices also dropped, particularly diesel, while summer sales brought down the cost of clothing. These falls pushed overall inflation down from 2.8 percent in May to 2.6 percent in June.
The British Retail Consortium credited “intense competition between supermarkets” for slowing food inflation.
Competition can force individual retailers to cut prices as they fight for customers and market share. But this shouldn’t be confused with production organised in the interests of the public. The same companies that compete with one another also share a common class interest: keeping wages low, reducing taxes on business and shifting their costs onto workers and the state.
That was made clear by BRC economist Harvir Dhillon, who said: “If retailers are to keep prices affordable for consumers in the long run, the Government needs to take practical steps to lower the everyday cost of doing business.”
“Andy Burnham has taken immediate action to ease pressure on household budgets; he must now look to do the same for businesses.”
The argument is familiar: affordable food depends on protecting the conditions for private profit. Workers may be offered lower prices when competition makes them profitable, but they have no right to affordable food independent of the needs of capital.
In practice, that generally means tax cuts, subsidies, cheaper labour or weaker regulation. The public is told that corporate profitability must be protected before affordable prices can be secured. Workers are expected to accept that every social necessity depends on maintaining favourable conditions for private accumulation.
The government has announced that England’s bus fare cap will return to £2 in January. Burnham has also promised to remove VAT from domestic electricity bills from October until the end of the year.
Chancellor John Healey called the lower inflation rate “news families want to hear” but added that “there is much more to do”.
Referring to the energy and bus fare measures, he said: “Both these changes are a win-win. They help keep inflation down, while helping people afford the essentials.”
The measures will offer some relief, and that relief matters. A cheaper bus journey or electricity bill makes a real difference to people living close to the edge. But temporary reductions don’t confront the power of the companies and property owners that control access to food, energy, housing and transport.
Nor do they undo the losses imposed on workers during the previous surge in prices. Inflation falling to 2.6 percent doesn’t mean prices have fallen by the amount they previously rose. The higher price level remains in place.
A worker whose rent, food and energy bills have risen sharply is still poorer unless their income has risen enough to compensate. Lower inflation merely slows the rate at which the gap may widen.
The present fall may also be brief.
Lower petrol and diesel prices followed a temporary halt in the US-Israeli war against Iran and the reopening of the Strait of Hormuz. With military operations paused, oil could again move through one of the world’s most important shipping routes.
But hostilities have since resumed, crude oil prices have risen again and analysts expect energy costs to push inflation upwards in the coming months.
This is how imperialist war reaches into the daily life of the British working class. Military aggression abroad becomes a larger fuel bill, a more expensive food shop and another excuse for wage restraint at home.
Britain’s rulers participate in and support the imperialist system that produces these wars, but they don’t send the bill to the arms companies, oil monopolies or wealthy investors that profit from them. They send it to workers.
Higher oil prices raise transport, agricultural and production costs throughout the economy. Food inflation can take up to 13 months to reflect disruption in international supply chains, meaning the full effect of the war against Iran may still be ahead.
The working class is therefore being offered a temporary dip in inflation while the same ruling classes continue the military escalation that threatens to drive it back up.
This isn’t simply a contradiction between good domestic policy and unfortunate events overseas. Imperialism isn’t separate from the British economy. It’s the international form taken by monopoly capitalism: the struggle for markets, resources, strategic routes and political domination.
The cost-of-living crisis and the war economy belong to the same system.
Conclusion
Capital constantly seeks to reduce the cost of labour relative to the value workers produce. It does so by raising productivity, suppressing wages where possible, extending or intensifying the working day, reducing the value of labour-power through making consumer goods cheaper, attacks on public services, or by shifting more of the cost of survival onto working-class households.
Workers may gain access to cheaper individual commodities while still facing worsening insecurity overall. A discounted tub of margarine doesn’t compensate for unaffordable housing, insecure work, rising energy costs or collapsing public provision.
That’s why the official inflation rate is such an inadequate measure of working-class conditions. It records changes in prices across a basket of goods. It doesn’t measure whether people can afford those goods, how much debt they’ve accumulated or what they’ve already been forced to go without.
June’s figures may provide a little breathing room. They don’t mark the end of the crisis.
Prices remain high, the relief is uneven and renewed imperialist war is already pushing oil costs upwards. The government’s limited measures may soften the pressure, but they leave economic power where it already lies: with the supermarkets, energy companies, landlords, banks and monopolies that control the necessities of life.
As long as those necessities remain commodities produced and distributed for profit, workers will continue to be told that affordability depends on the needs of business. Every improvement will be fragile, every concession temporary and every new crisis an opportunity for capital to make the working class pay.
