Deflation doesn't mean we have all become rich

 

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Less than a month ago Britain officially went into deflation for the first time since 1960; it all happened after the inflation had surprisingly dropped to zero in March.

The Consumer Price Index, which measures the cost of household bills and goods, fell to -0.1 per cent in April, mainly caused by a plummeting world oil prices, with the cost of motor fuels down 12.3 per cent and a discount war at supermarkets. A fall in food prices of 3 per cent, in fact, has been driven by high competition among big chains.

Chancellor George Osborne has promptly dismissed fears that economic growth was stalling, by declaring the country was not facing a damaging deflation.

“Instead we should welcome the positive effects that lower food and energy prices bring to households when wages are rising strongly, unemployment is falling and the economy is growing,” he said.

Such a scenario should primarily have a beneficial impact on the economy by boosting consumers’ confidence through increasing purchasing power and people should take this opportunity, as the Bank of England expects inflation to rise again towards the end of the year.

However, deflation does not turn poor people into wealthy citizens.

According to data released last month by the Office for National Statistics (ONS), in 2013 around 4.6 million people, equivalent to 7.8 per cent of the UK population, were considered to be in persistent poverty. Those who experience such a difficult situation have been in relative income poverty both in the current year and at least two out of the three preceding years.

Further data revealed that almost a third of the UK population suffered through poverty in at least one year between 2010 and 2013; 19.3 million people, in fact, had a disposable income of maximum £9,525, which falls below the official poverty line.

Far too many people live on minimum wage, as well.

Chris Philp, a newly-elected Tory MP for Croydon South, has recently declared that “it is not possible to live on the current national minimum wage, especially in London,” and has asked the Low Pay Commission to recommend rises in the national rate, with London having a separate higher fixed amount.

According to the MP,  the increase would not only help people towards a more comfortable life, it will save public money, too. In fact, many families are currently having their low earnings topped up with tax credits. And if there is one thing we can be sure of, is that taxpayers are “subsiding companies who are not paying their staff properly”.

Fast-food shops are growing too fast

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Fast-food chains all over the country have flourished over recent years, reflecting the nation’s taste for flavorful, affordable and effortless food.

The most recent research on the growth in places selling ready-to-eat hot food comes from the University of Cambridge, where academics found that the number of take-away outlets in Norfolk area rose by 45 per cent, from 265 to 385 shops, over the last 18 years.

The study, carried out at the University’s Centre for Diet and Activity Research (CEDAR), has also revealed that the biggest percentage increase took place in the most deprives areas, which tend to have the highest obesity level.

The public health implications are huge, as diets consisting of large amounts of salt and saturated fats are all linked with obesity and chronic illness.

Health Survey for England revealed that 25 per cent of adults, on average, were obese in 2011-2013, compared to a lower 15 per cent twenty years before.

However, grown-ups are not the only ones bearing the brunt of an unhealthy diet consisting of fried chicken, fish and chips and kebabs.

According to 2013-14 data released by the National Child Measurement Programme (NCMP), 19.1 per cent of 10-11 years old kids in England were obese and a further 14.4 per cent were overweight. The programme, which measures the height and weight of around one million school children every year, has also highlighted that over a fifth of 4-5 year olds were overweight or obese during the same period.

While local councils throughout the country are planning measures to restrict the development of junk food shops, most London boroughs gathered in 2010 to put in place new regulations to introduce a limit on the number of fast food outlets allowed in a specific district and to fix a minimum distance requirement of 500 metres between school buildings and these kind of shops.

Not by chance,  London is the city with the highest rate of childhood obesity. In fact, 34 per cent of primary school kids in the capital are overweight, not to mention that one in three is obese.

Cameron heads back to No. 10

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Prime Minister David Cameron returned to No. 10 today after an unexpected triumph.

The Conservatives, in fact, have won the General Election by 51 per cent, securing a majority of 331 seats. The previous outright win for the Tories had been in 1992.

Mr Cameron, who has described the result “the sweetest victory of them all” despite a tiny overall majority, is about to appoint his all-Conservative cabinet and has already confirmed that both UK Home Secretary Theresa May and Chancellor of Exchequer George Osborne, will be staying.

The 2015 General Election, which has been one of the most talked-about, has resulted in a crushing defeat for the Labour Party, which lost 40 out of its 41 seats, despite the Tories and the Opposition being neck and neck until the last day of campaign.

Having received only 36 per cent of the votes, leader Ed Miliband decided to resign. He said: ”I am truly sorry I have not succeeded (…). Put yourself up and continue the fight”.

Also the leader of the third major party quit. The Liberal Democrats’ power has been nearly obliterated with 1 per cent of the votes, which is the worst result for the centre-left party since 1970.

The Lib Dems, who five years ago were joining a coalition government with the Tories, have only secured 8 seats in Parliament.

Nick Clegg is now the ex-party leader and declared: “This has been a cruel and punishing night for the Liberal Democrats (….). Our party will come back, our party will win back (…). It will take patience and resilience (…)”.

Even UKIP leader Nigel Farage resigned. His party is not going to have any seats in Parliament and he has announced his intention “to stay away from the political stage” until the end of the Summer, to possibly put his name through again after a well-deserved break.

Meanwhile, big celebrations are taking place in Scotland. 
In fact, a rampant Nationalist Party has positioned itself as the third largest force at Westminster, securing 56 of 59 Scottish seats in the General Election.

Scottish National Party (SNP) leader Nicola Sturgeon, who is also the First leader of Scotland, has described the victory as “an unprecedented triumph”.

Even the Green Party has seen its most successful election ever, with one million votes for a single MP, Natalie Bennett, who is now looking forward to taking her seat in Parliament. 

Now that one of the longest General Election campaigns has ended, the whole of the UK, with particular regard to the 66.1 per cent of the population who cast their vote, would like to know what to expect from this new, Conservative-only Government.

Details will become clear over the next few days, however, cuts to the Government spending, including the Welfare, new laws empowering the police and security services to prevent terrorism attacks, as well as new agreements with Scotland are already on the list. 

An in/out EU referendum is likely to take place by the end of 2017, as well.