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Prices

Volume 933: debated on Monday 20 June 1977

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12.

asked the Secretary of State for Prices and Consumer Protection what is the increase in the retail price index, excluding seasonal food, over the last three months, expressed at an annual rate.

7.

asked the Secretary of State for Prices and Consumer Protection what is the current rate of inflation.

14.

asked the Secretary of State for Prices and Consumer Protection what is the latest year-on-year percentage increase in the retail price index, all items.

The current rate of inflation is, as I stated in my reply to the hon. Members for Eastleigh (Mr. Price), Banbury (Mr. Marten), Reading, North (Mr. Durant) and West Stirlingshire (Mr. Canavan), 17·1 per cent. For what it is worth, the increase in the RPI, excluding seasonal food, over the last three months expressed at an annual rate is 19·9 per cent. However, I do not regard the three-monthly annualised figure as a statistically valid indicator of trends.

Will the right hon. Gentleman make clear to the House, and especially to his hon. Friends below the Gangway, that the appalling increase in the retail price index during the past three months has not been a consequence of Britain's membership of the EEC?

I tried to make that point clear not only to the House but to a wider audience a week ago. The effect of the common agricultural policy, about which there have been many legitimate criticisms, is negligible compared with other factors affecting the increase in the cost of living. Its effect has been about 05 per cent.

I hope that the hon. Gentleman will not talk about annualised figures in that florid fashion. The annualised rate, based on May figures, shows that inflation is now running at less than 10 per cent., but I do not believe that that is a statistically valid thing to deduce.

Does the right hon. Gentleman realise that the figures, annualised or financialised, are in horrible contrast to the expressed intentions of the Government? Will he explain—as he has said that foreign confidence in Britain is very much dependent upon certain aspects of the Government's war on inflation—how that can be squared with the requirements of the Price Commission Bill for permanent powers of investigation, intervention and price control?

I must first explain that the figures that I have just announced are in no way in conflict with the Government's previous estimates. The 19·9 per cent. is in conflict with good statistical practice and the other figure of 17·1 per cent. is the sort of figure that we predicted throughout the spring as the level that we expected in the summer. We shall begin to reduce it month by month in the late summer and early autumn.

As for the Price Commission, I have no doubt that it will play a substantial part in bringing inflation under control. The general need to keep inflation under control must be reflected in our national economic policies, but a part of those policies must be an effective Price Commission, and that is something that we shall create.

Does my right hon. Friend agree that the common agricultural policy has had an effect and that so also has the harmonisation of prices in this country with European prices, especially for farm produce? Does he not agree that this has had an effect on the RPI? Does he not realise that working people are now saying that we were promised Common Market wages but that all that we have had has been Common Market prices without the wages to go with them?

I can give only the statistical facts as calculated in my Department a week ago. Of the 17·5 per cent. inflation over the last year, about 1 per cent. was calculated as being caused by the CAP.

Since that time, as I am sure my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) will be gratified to know, I have thought it necessary to revise that figure. It is not 1 per cent. It is 0·5 per cent.