Slump holds off inflation

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Tory politicians and news analysts last week tried to make the best of the recession, as they pointed gleefully at the drop in the inflation figures from an annual rate of 21% to 16.9%. "This apparently large drop embodies a confidence trick, since three-quarters of it is due to the fact that it is now a whole year since the Tories deliberately added 3% to the cost of living by raising VAT.

Though we continue paying these inflated prices, they no longer show up in the inflation figures!

When this is left out, the monthly rate of increase in prices has fractionally fallenfrom around 12% to just under THE SENIA But even this "success" is simply the fruits of recession. So severe is the slump in sales of goods-from consumer durables to clothes; from household goods to beer -that retailers and manufacturers have temporarily held back from price increases.

Some retailers have embarked on desperate pricecutting measures and prolonged summer sales-which have artificially lowered the retail price index.

Bills up

Petrol prices too have been forced down. But. many bills faced by working class families continue to soar. Electricity, gas, coal, water, rail and bus fares, post and telephone costs have all sky-rocketed-as a result of deliberate Tory policies.

Rates and rents, too, are rising by-product cuts.

The month's inflation figures may cheer the statisticians, but they will not convince many workers.

Nor do they please many retailers and manufacturers. Their inability to raise prices as they fight for market share means that their profit margins are being drastically squeezed.

The £16 million plunge in Woolworth's profits is indicator of some of the problems caused by high interest rates, the sales slump, and heavy stocks of goods.

Woolworth, like other store chains, is cutting back on staffwith the threat of short-time or even redundancies.

Exports of manufactured goods have faced a similar slump as the pound has hit its highest level for 5½ years.

Tory talk of "squeezing out inflation" is thus only one side of the policies they have embraced: they are also squeezing out the weakest firms-and squeezing out jobs by the tens of thousand.

And, of course, should there by any chance be in the next period any sign of upturn in the retail market, the price increases held back at present will emerge in a new surge of uncontrolled inflation.

In these conditions workers should ignore all of the phony price indexes produced by the government-whether they be the Retail Price Index, the inflation figures, or the Tories' ill-fated "tax and price index", which as a result of their fiddles last year now shows inflation having gone up from 17.5 to 18.5% in the last month!

Instead trade union bodies should urgently set up elected committees, drawing in housewives and sympathetic expert help, to formulate a working class prices index that will take full account of Tory policies on workers living standards.

And wage claims should demand that agreements include cost of living clauses to protect against inflation by giving an automatic 1% rise in take home pay for every 1% rise in the workers' price index.

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A two-part article by Bob