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Inflation

Volume 932: debated on Thursday 26 May 1977

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27.

asked the Chancellor of the Exchequer what is the effect on the rate of domestic inflation of a rise or fall of 1 per cent. in the £ sterling exchange rate.

As a rough rule of thumb, a 1 per cent. rise or fall in the exchange rate can be expected to reduce or increase retail prices by between ¼ and ⅓ per cent. Most of this effect is through within nine months.