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Volume 933: debated on Monday 20 June 1977

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asked the Secretary of State for Prices and Consumer Protection what has been the year-on-year rate of inflation up to April 1977 and May 1977.


asked the Secretary of State for Prices and Consumer Protection by what percentage prices have risen in the last 12 months.


asked the Secretary of State for Prices and Consumer Protection what has been the percentage increase in the retail price index over the last six months, excluding seasonal foods.


asked the Secretary of State for Prices and Consumer Protection what is the latest rise in the retail price index.

The year-on-year increase in the retail price index was 17·5 per cent. in April and 17·1 per cent. in May. This improvement results from the May increase of 0·8 per cent., less than one-third of the increase registered the previous month and the smallest monthly addition to the RPI for almost a year. Over the six months to May the RPI, excluding seasonal foods, has increased by 9·5 per cent.

I welcome the 0·4 per cent. reduction between April and May, but does the right hon. Gentleman acknowledge that an increase of 17·1 per cent. for the last year means that the cost of living has doubled in just over four years? Is that not a punishing rate of inflation? Will he also acknowledge that until we bring the inflation rate down to about 3 per cent. the situation will not be tolerable?

I agree that what has happened on inflation in the recent past is a record that needs substantial improvement. It is easier to describe what has happened in the past than to predict or to make sure that something better may happen in the future. I believe that something better will happen in the future because of the partnership between the unions and the Government. We will stay in office until we bring that situation about.

I recognise that the Government expect inflation from last November to next November to rise by no more than 14 per cent. If there is a significant rise over the 14 per cent. figure before next November, will the right hon. Gentleman think it right to press for an adjustment in retirement pensions and related benefits?

Part of the hon. Gentleman's supplementary question is not a matter for me, and the part which is a matter for me is wholly hypothetical. Therefore, for two reasons I should not answer it.

In view of the justifiable calls for stricter price controls by the TUC and the National Consumer Council, will my right hon. Friend condemn the impertinence of the Common Market Agriculture Commissioner, Mr. Gundelach, who is claiming that British Ministers are breaking the law by speaking out against the common agricultural policy—a policy which has been responsible for many of the food price increases, which can only be described as criminal?

The correspondence between Commissioner Gundelach and my right hon. Friend the Minister of Agriculture must be a matter for my right hon. Friend. On the concept of selective price freezes, I have no doubt that in future there needs to be a Government power to enable some prices to be frozen. Many of us will be sitting here tomorrow and probably until the day after to make sure that that power is obtained.

As the National Consumer Council has recommended an upper limit of 9 per cent. on price increases, will the right hon. Gentleman say what action he will take if this leads to the erosion of profit margins or to their elimination so that unemployment will increase still further?

I do not answer for the National Consumer Council, which expresses the views of the consumer, but I have a great deal of sympathy for its objectives as expressed in a draft paper last week. My only reservation is that a general and arbitrary price freeze could do the economy substantial damage. A selective price freeze is an advantage. That is why we are piloting a Bill that will bring about a selective freeze.

Does my right hon. Friend agree that the rate of inflation which he envisages will not happen of its own volition and that there will have to be interventionist policies by the Government? Will he stand by his statement last week that the £ sterling should be allowed to rise to its rightful level? Will he also stand by his statement that it is necessary for us to have a price strategy for the public sector, particularly for the energy industry?

Of course I stand by the speech I made last week, but my hon. Friend will understand that some parts of that speech were seeking to draw the attention of the wider public to the fact that decisions on inflation are difficult to take because they are sometimes in conflict with other economic objectives. I tried last week to set out the alternatives. We look forward to hearing from the House, the country and the party about the rival claims on economic resources.

Will the right hon. Gentleman go further than to express the hope that inflation will come down? Bearing in mind that it is almost midsummer and that we have been promised that inflation would be down to single figures, has the right hon. Gentleman had a midsummer dream about the time at which we might expect a drop to single-figure inflation?

I stand by the forecasts which I made during the last nine months. During the late summer and autumn there will be reductions in the year-on-year rate, and I believe that we shall be down to single-figure inflation as a real prospect in the second quarter of 1978.