asked the Chancellor of the Exchequer what steps are being taken to prevent a serious inflation rise in prices in the Middle East and the consequent injurious effects on local economies?
It is not possible to deal with this subject fully within the limits of a Question and answer. Inflation in the Middle East is mainly caused by the very large local expenditure of the Allies for the prosecution of the war on the one hand and a shortage of supplies occasioned by shipping stringency on the other hand. The military expenditure of the Allies is subject to continual review and is kept to the minimum consistent with military necessity. Lack of supplies is inevitable as long as it remains necessary to concentrate our shipping resources on winning the war. It is, therefore, necessary to remove surplus spending power in the hands of the public by taxation, by loans and by the stimulation of saving in order that it may not compete for limited supplies of goods and services available but may be retained for the benefit of the countries concerned when supply and transport conditions return to normal. The importance of taking such measures and of controlling prices, rationing commodities in short supply and keeping down the cost of living by subsidies is constantly impressed upon the Middle East Governments by the Minister of State and His Majesty's representatives in the Middle East. Action by the various British authorities concerned is co-ordinated by a Standing Committee on anti-inflation measures which meets in Cairo under the chairmanship of Lord Moyne. This Committee which has Anglo-American membership was set up as a result of a conference on inflation of representatives of His Majesty's Government in the Middle East territories and of certain American representatives which was convened by the Minister of State last September.