LecturerGood morning. Today we look not at the theory of inflation but at its human side: how rising prices actually squeeze ordinary households, and what can be done.
LecturerWhen rising prices outpace what people earn, the newspapers call it a cost-of-living crisis, and the phrase has become all too familiar.
LecturerTo track these prices, statisticians use a fixed basket of typical goods, which they review every year to keep it realistic and up to date.
LecturerSo where does the squeeze hurt most? For the great majority of families, the single biggest cost is housing — whether that's rent or a mortgage.
LecturerSome prices, especially fuel and energy, are highly volatile, swinging sharply up and down from one month to the next.
LecturerHere is a subtle but vital point. If your pay rises by two per cent while prices rise by five, then in real terms you have actually taken a pay cut.