There were not one but two effigies of Keir Starmer paraded through the streets of Lewes for its traditional 5 November bonfire night parade last week \u2013 a depressing first for a sitting prime minister.<\/p>\n
The Treasury has got the message. In her unprecedented 8.10am address to the nation, the chancellor singled out the cost of living crisis not once but thrice, along with the NHS and lowering debt as priorities the British people wanted to see addressed. She would, she said, in a passage uncomfortably laden with Treasury-speak, \u201cbear down on inflation and the cost of living. Inflation has been too slow to come down as supply chains continue to be volatile \u2013 meaning that the cost of everyday essentials remains too high.\u201d<\/p>\n
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For information about how The Observer protects your data, read ourPrivacy Policy<\/a><\/p>\n What does she actually mean? What has she in mind? And who will be the likely beneficiaries?<\/p>\n The inflation conundrum<\/p>\n Britain\u2019s inflation rate reached a peak of 11.1% in October 2022 as world food and energy prices shot up in the wake of the Ukraine war, although it is now sharply lower at 3.8%. Still, even our peak inflation rate was higher than others<\/a>, and today it is nearly twice the 2.1% in the eurozone and higher than the 3% in the US. Probe deeper and over the past four years prices overall have risen by 25% in Britain. Particular culprits have been food price inflation \u2013 up 38% \u2013 and energy prices \u2013 up 55%. We know why those prices rose, but not why they rose more and have fallen less quickly than elsewhere \u2013 and why, leaving them aside, the same is true of core inflation.<\/p>\n The chancellor\u2019s oblique reference to supply chain volatility hints at the explanation. In essence, we can thank the excessive deindustrialisation of the 1980s which, by punching huge and expensive holes in our industrial capacity, forced British manufacturers to source the supply of key components abroad. Brexit then made one of the most important areas for that sourcing of supply more expensive again.<\/p>\n