Price inflation: facts, prospects, and responses

How much have prices risen? 10.1% (CPI), 13.5% (RPI), 19.2% (food), between March 2022 and March 2023.

The high CPI and RPI rates are due to food prices? Not entirely; Germany has 22% food inflation, 7.4% CPI; France 16% food, 5.7% CPI. Food is only 10% of the CPIH “basket”. The UK’s higher rate is mostly due to household energy prices having jumped sharply here between March and April 2022.

So the official May inflation figures (for rise between April 2022 and April 2023) will be lower? Almost certainly. Also, world wholesale food price rises have been slowing for a while, and that will probably feed through to shop prices. But we don’t know how much inflation will go down.

RPI

Why is RPI higher than CPI? Many reasons, but one main one is that they average over prices in the basket of goods differently. There are technical merits to the CPI averaging, and most countries have only a CPI equivalent, not RPI. But the Resolution Foundation reports that inflation now (March 2022 to March 2023) is 3.5% higher for the worse-off than for the better-off. It is usual for prices of high-ticket consumer durables bought by the well-off to rise more slowly than prices of basics. It makes sense for unions to cite RPI as a rough-and-ready “compensation”. Mind you, even at a given income level, inflation will differ between households in different areas, with different diets, with different transport use... Private rents went up 4.9% on average between March 2022 and March 2023, but some rents will not have risen, others will have risen sharply. France’s official statistics website allows you easily to estimate inflation for different sorts of households. Not Britain’s

What’s the answer? Better than plucking a single month’s RPI figure as a makeshift base for wage claims (as unions often do), construct a working-class prices index. And demand escalator clauses to increase wages in line with prices every month. (Belgium already has escalator clauses, though not monthly).