If the papers are to be believed, George Osborne, his Treasury officials and Tory MPs should be near dancing in the streets today while Labour MPs should be holding their heads in their hands. Why? Because new figures show that inflation has fallen and that wages are now rising more quickly than prices for the first time since 2008.
It’s news that should hit the destruct button on Labour’s cost of living argument, on which the Party leadership has placed so much stock in recent weeks and months. Wages rising faster than prices should serve as a validation of Conservative and Coalition financial policy and should leave the average voter with more money in their pocket for the first time in more than half a decade.
But while this is undoubtedly good news for the UK economy, the general public, the Coalition and of course the Chancellor, it would be a mistake to think the fat lady was already tuning up to announce the end of Labour’s electoral chances and particularly its cost of living argument. Ed Balls is correct in his assertion that while the fall in inflation does represent good news, there is substantial ground to be made up on the situation in 2008. Equally, it would be premature, even in the light of a series of good news financial figures, to claim that we’ve turned a corner. Further data is surely needed to first establish that wages outstripping inflation is a trend rather than a false dawn
Labour can of course point to the continuing financial problems the public face. Today’s City AM highlights that house prices in London have risen by more than 17 per cent in the last year, while prices across the UK as a whole have risen by more than five per cent – the point being that there remain enormous challenges to getting onto the property ladder. Childcare remains a significant cost to many families. And a new report from the Trussell Trust has claimed there was a 163 per cent increase in the use of food banks last year.
Political consultants should recognise the inflation figures represent a blow by the Government to the credibility of Labour’s cost of living argument, but not a fatal one. As ever, the argument will ultimately be won by the side that is able to take their argument from the abstract and relate it to the situation facing members of the public. The Government will need to show tangible examples of how people are now better off, while reassuring the public that this is a step in an upward trend. Labour will have to give examples of how people are continuing to struggle – while also explaining more clearly than at any point to date what they would do if returned to government in 2015.