Official figures yesterday showed that while inflation fell to 2.8% in July, to nearly half of its peak of 5.2%, times are tough for families. The cost of living is outpacing wage rises with the average family £1,350 worse off than when Cameron came to office. Food prices are rising more than twice as fast as average pay, and rail passengers face fares rising by up to 9.1%. The latest price hike means train fares and season tickets on the busiest routes into London will be 58% higher than they were in 2000, and up by 20% in real terms.
Developers and politicians have hit back at claims that the government’s housing stimulus measures are promoting speculative buying that risks inflating another housing bubble. Over 10,000 reservations for new-build properties have been made through the government’s flagship housing scheme in its first four months. Eric Pickles, communities secretary, argued the coalition’s measures to boost housing were working, with “house building and housing supply on the up”. This view was echoed by the largest housebuilders, who have long cited a lack of mortgage availability as the greatest impediment to recovery in the property market and construction sector.
UK 10-year borrowing costs have climbed to the highest for two years amid market doubts about whether the new Bank of England governor, Mark Carney, will be able to keep the lid on interest rates until 2016. The rise came despite the shift by the Bank last week to provide more explicit guidance on future monetary policy, a move that is meant to persuade markets that rates will remain at historic lows.