Cost of Living in Great Britain

Press, Volume LXXIV, Issue 22319, 5 February 1938, Page 14

Cost of Living in Great Britain

The cables reported yesterday the presentation in the House of Commons of a petition, signed by 804,000 persons, against the rising cost of living. The two obvious inferences from this event are both superficial and false. The more superficial one is that industrial and commercial recovery, such as Great Britain has experienced, is only a phase of increased production at increased cost, which leaves everybody worse off. The less superficial one is that the boom has begun to work itself out, having reached the point at which the rate of investment is outstripping the rate of production, so that unit costs are rising, consumption will tend to fall, and deflation set in. The first inference, once stated, rejects itself; for the second there is no good evidence. The real meaning of the petition is that certain consumer groups low-rate wage-earners, recipients of small fixed incomes, etc.—have lost some of the advantage in purchasing power which the fall in commodity prices gave them between 1929 and 1933; and it is not a misleading half-truth to say that their complaint is a special, sectional one against the loss of the benefits which the depression conferred upon them while it injured the majority. In other words, and from this point of view, it is a complaint against recovery. For it is unquestionably true that the lower cost of living of a few years ago was the sign and reflection of lower production and stagnant trade and that recovery was impossible without an advance of commodity prices, which was, in fact, the object of State policy. The Macmillan Committee, insisting that the collapse of prices was the cause of the economic paralysis, recommended their reflation. That has been effected, or nearly so. At the end of last year, commodity prices stood at 96.9 against the 100 of the basic year 1929. But that comparison is valueless without corresponding wage and cost of living comparisons. These show that, against the 100 of 1929, wages at the end of last year stood at 102.8 and the cost of living at 96.4. The average consumer, in other words, is earning rather more money to-day and can byy rather more with it than in 1929, when he was reasonably well off; and while this result has been achieved, trade, production, and employment figures have all risen sharply. It must be admitted, however, that averages in so complex a matter as the cost of living are a little fal-

lacious. Rents may vary distressingly from place to place, or the price of particular necessaries be out of all proportion to the general commodity level. But it does not appear that the figures above, which were given in the House of Lords in December by Lord Horne, need to be qualified by reference to specific abnormalities and variations. In respect of food, as it happens, the Minister for Labour about the same time quoted food prices, for November, 1929, and November, 1937, which showed that meat, bacon, butter, and eggs had fallen relatively and markedly in price, while only bread, tea, milk, and potatoes were a little dearer. The conclusion is not, of course, that nothing can or should be done to improve the relative purchasing power of groups upon which the pressure of rising commodity prices bears hardest. Roughly, these are low-income groups; and there can be no doubt of the desirability of improving their standard of living in housing and nutrition above all. But whatever can be done for them in this way—by easing or removing indirect taxes, for example, especially on articles that are properly to be called necessaries—the point is that at present nothing is less to be desired than general deflation of prices. It has been the weakening of commodity prices that has checked production and hung the threat of a new economic dislocation over the United States. -