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Retail Price Index

Volume 886: debated on Monday 10 February 1975

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5.

asked the Secretary of State for Prices and Consumer Protection what is the current rate of price increases, based upon the last three months of the retail price index grossed up to an annual rate.

11.

asked the Secretary of State for Prices and Consumer Protection what she estimates the annual rate of increase in the detail price index now to be.

21.

asked the Secretary of State for Prices and Consumer Protection what has been the increase in the cost of living since February 1974

26.

asked the Secretary of State for Prices and Consumer Protection what is her latest estimate for the rise in the cost of living during the past 12 months.

The retail price index rose by 19·1 per cent. in the 12 months to December 1974 and the increase over the three months to December, expressed at an annual rate, was 25·2 per cent. Since February 1974 the actual increase was 14·9 per cent.

Are the Government trying to fool the country by pretending they can stem the tide of inflation by indiscriminate food subsidies when this additional Government spending is simply adding to the pressures of inflation?

The Government are not trying to fool anybody. From the beginning we pointed out what subsidies could do and what they could not do. Nevertheless it is true that subsidies have reduced the food index by six points, and in consequence the food index in the whole of this year has not yet reached the levels that it reached when the last Conservative administration left office.

Is not the right hon. Lady disappointed by the figures which she has quoted in view of what was promised to the electorate before the 1974 election?

The promises which we made have been carried out. They include such matters as maximum price orders, food subsidies and display requirements. All are being introduced on to the statute book. I am, however, disappointed by a rate of inflation which is as high as 20 per cent. a year. The factors involved in that, as the hon. Gentleman will know, include such matters as the level of the value of sterling, the recent very sharp increase in some food raw materials, especially sugar, and, as my right hon. Friends the Secretary of State for Employment and the Chancellor of the Exchequer have made clear, our considerable concern about the level of at least a minority of the income and wage settlements being made. But this is not entirely due to those who are within the social contract. Some of the highest settlements are being proposed by professional groups and others outside it.

On the basis of the figure of 25·2 per cent. being the rate of inflation over the past three months, will the right hon. Lady say what the rate of inflation would have been had there been no food subsidies?

I have said already that the rate of inflation over the RPI generally would have been between 1½ and 2 per cent. higher. The food index would have been 6·.8 per cent. higher. The 25·2 per cent. figure is misleading because it is based on a 13-week and not a 12-week period, which is the normal period.

Is my right hon. Friend aware that there is considerable confusion amongst housewives about what are genuine prices? Is there a problem in recruiting qualified staff in the weights and measures departments of the responsible authority?

There is a problem here, and my hon. Friend will agree, I am sure, that this is one reason why the Government want to make as widely available as possible both comparisons of prices and full display of maximum prices where these apply. We are anxious to involve the housewife in supporting trading standards officers in bringing this about.

Is my right hon. Friend aware that an important component in the retail prices index, especially for pensioners, is the price of fuel? Although my right hon. Friend's Department appears to have the food situation under control, there is considerable doubt whether the price of fuel is to be controlled properly.

My hon. Friend will be aware of the efforts being made by the Government to try to restructure tariffs so as to assist the small and less-well-off consumer. Incidentally, this is the first time that that has been undertaken by a Government in respect of the nationalised industries.

As the right hon. Lady's prognostications about the rate of inflation have been somewhat variable, volatile and subject to seasonal fluctuations, will she now say what she expects the rate of inflation to be over the coming 12 months, what the main contributing factors are likely to be and how long it will be before a packet of crisps costs £10 if claim settlements at the rate of the present miners' settlement are allowed?

If I were unwise enough to enter the hypothetical stakes suggested by the hon. Lady, I might have to put in for the leadership of a party different from my own.

Has not the rate of inflation something to do with the borrowing requirement in respect of State expenditure in this and previous years?

The right hon. Gentleman is right in saying that one of the inflationary factors is the public sector borrowing requirement. However, I have always made it clear that food subsidies are offset almost entirely by the increased taxation introduced in the April 1974 Budget.