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Retail Prices Index

Volume 175: debated on Thursday 5 July 1990

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To ask the Chancellor of the Exchequer when he last met representatives of the retail prices index advisory committee; and what was discussed.

To ask the Chancellor of the Exchequer when he next expects to meet the retail prices index advisory committee to discuss the contents of the price index.

It has never been the practice for the Minister responsible for the retail prices index to hold discussions with the advisory committee. The committee's recommendations are submitted as formal reports, which are subsequently presented to Parliament and published. My right hon. Friend the Chancellor of the Exchequer announced in his reply to my hon. Friend the Member for Carshalton and Wallington (Mr. Forman) that he had received such a report and will be announcing the Government's decision on the recommendations in due course.


To ask the Chancellor of the Exchequer if he will make a statement on the adequacy of the retail prices index as a guide to the cost of living.

The retail prices index is not a cost of living index in the strict sense of measuring changes in the cost of maintaining a particular level of consumption: nor is it a measure of what people need to spend in order to live. Rather it measures the impact of price changes on the cost of a "basket" of goods and services as purchased by households in the United Kingdom and I am satisfied that, given that "basket", it is adequate for the purpose. However, the index is affected by short-term, factors which make it an unsatisfactory indicator of the underlying trend of inflation, and it may also be unsuitable for international comparisons as other countries' indices are constructed differently. In particular the RPI is unusual in including mortgage interest payments and the community charge. For some purposes it is therefore helpful to refer to derivatives of the RPI or to other indices.