At one point in this summer, back when we were all beginning to worry summer 2013 would be remembered for its high winds and driving rain, a survey by PricewaterhouseCoopers showed 75% of high street retailers had sales on.
At the time, it was bad news for retailers – but a couple of months on, it’s proven positive for new Bank of England governor Mark Carney. Figures by the Office for National Statistics published this morning show the consumer prices index dropped to 2.8% in July, pushed down by lower air fares and a reduction in the cost of ‘leisure and cultural goods’ – as well as heavy discounting by high street retailers. Silver linings and that that…
Now admittedly, July’s inflation figure is a mere 0.1% down from June’s – but it’s a step towards the Bank of England’s target of 2%.
The gradual nature of its decline suggests Carney’s decision to switch the focus of interest rates away from inflation and towards the unemployment rate may have been sensible. The chances of inflation in the UK dropping as low as 2% over the next couple of years is pretty slim.
It isn’t enough for rail commuters, though: because rail fares are set using the Retail Prices Index plus 1%, their Christmas present from National Rail will be a 4.1% average rise in fares. In some places, it’ll be as much as 9.1%. Hence TUC protests at 50 stations across the UK this morning: hell hath no fury like a commuter spurned.
Here’s interesting table from the TUC comparing average rises in earnings with rises in rail fares over the past five years (and into 2014).
|Average earnings (Jan)||Rail fares (Jan)|
The long and short of it is that between 2008-2014, wages will rise by 15.6%, while rail fares will rise just over 40%. You can see why passengers are upset.
But the reality is there isn’t much train companies can do. Network Rail, for instance, is in £30bn of debt and has been told to cut costs by £2bn before 2019 by the Office of Rail Regulation. As the number of passengers rises, as must the level of investment by rail companies. Something’s got to give: alas, at the moment, it’s commuters’ wallets.