To ask the Chancellor of the Exchequer if he will assess the merits of targeting inflation on the RPIY basis instead of on the RPIX basis; and if he will make a statement. [11373]

[holding answer 29 July 1997]: RPIX inflation is now a well-understood and accepted measure, RPIY has the property of excluding indirect taxes, which is useful for some purposes, but it does not measure prices actually paid in the shops and it does not measure what inflation would be in the absence of indirect tax changes. It is also less widely used and less well understood. On balance therefore, the Government decided that RPIX was the better target, but the Bank of England will continue to monitor RPIY in its "Inflation Report".