Douglas Carswell's Blog

The budget should not ignore inflation

I'll be listening out for how many times the Chancellor mentions the word "inflation" in his budget speech today.

At the weekend a constituent complained about the cost of groceries.  They used the example of butter, the price of which, they told me, has increased sharply.

With inflation now running at about 5 percent a year, people's incomes are, in terms of what they can buy, declining.  Inflation at this rate acts as a tax, eroding family incomes and salaries, while helping the Treasury whittle away its massive public debt.  

So yesterday, I stood up in the Commons to ask the Chancellor what he might do to curb inflation.  George Osborne replied that the "Monetary Policy Committee is of course independent. It is set a target by the Chancellor, and I expect the Bank to pursue that target."

Maybe.  I'm not sure pinning it all on the MPC is the answer I'd give my constituent in Clacton.  Nor am I sure what relationship the MPC's targets have with the monetary policy that the MPC is following.  Does the MPC?    

Folk are feeling the squeeze.  They realise that prices are rising because of public policy decisions, not simply forces beyond our control or these shores.  And they will hold those they elect responsible for the public policy decisions that are made - MPC targets or not.

I hope that today's budget gives people a tax break.  I hope it reduces the burden on business.  But unless we also curb inflation, any of the gains in tax breaks made today will be off set by rising prices and a debauched currency. 

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