What consumers need most is lower commodity prices

It is often assumed that the fiscal squeeze is driving the current weakness of consumer spending and that government measures – such as a VAT cut – are all that are needed to get the consumer recovery back on track. But real pay began to fall long before the austerity measures kicked in. The bigger squeeze on real pay over the past few years has come from rising food and energy prices, suggesting that what consumers need most of all is a sustained fall in commodity prices.