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Inflation (International Comparisons)

Volume 974: debated on Monday 19 November 1979

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asked the Secretary of State for Trade what is the present level of inflation as measured by the retail price index; and what are the comparable levels for the other members of the European Economic Community.

The retail price index increased by 17·2 per cent. over the 12 months to October and by 10·3 per cent. over the 12 months to May.

As the Minister did not give the comparable figures for the European Community I assume that, unlike the press, the Treasury does not keep those figures. Is the right hon. Lady aware that the Treasury indicated in figures published last week that the correlation between growth of the money supply and inflation broke down two years ago and that present inflation is not due to money supply, and still less to rises in wages for working people, but is almost exclusively caused by the actions of the Government since they came to power in April?

In answer to the first part of the hon. Gentleman's question, with permission I shall circulate the figures for other members of the Community in the Official Report. As he will be aware, the rate of inflation in this country was higher when we took office than in most other countries of the European Community. I do not accept his diagnosis of the present cause of inflation.

Now that the Treasury's forecast of inflation has been invalidated by last week's statement, will the right hon. Lady give us her inflation forecast for next year?

The Government's counter-inflation strategy is not aimed at any one year, or any one month. We are tackling the root causes of inflation in all our economic policies. The consequences of living beyond our means during the past five years will be painful in the short term, but I believe that in the long term our policies will succeed.

Following is the information:

In September (the last month for which comparable figures are available) inflation in the nine EEC members was:
  • Belgium 4·6 per cent.
  • Denmark 12·8 per cent.
  • France 11·0 per cent.
  • Germany 5·3 per cent.
  • Ireland 13·6 per cent. (To August, latest available figure).
  • Italy 15·1 per cent.
  • Luxembourg 5·1 per cent.
  • Netherlands 3·9 per cent.
  • United Kingdom 16·5 per cent.