asked the Chancellor of the Exchequer what is his Department's estimate of the relation between a 1 per cent. increase in average hourly wage rates and the rate of retail price increases, all other factors remaining constant.

A 1 per cent. increase in average hourly wage rates would be expected to add about 2/3 per cent. to retail prices if non-labour costs—for example, the exchange rate, the green pound and specific duties—were held constant. In practice, these factors will in time adjust to the increase in labour costs. The effect on prices will therefore approach 1 per cent. in the long run.