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Inflation Measures

Volume 407: debated on Monday 23 June 2003

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To ask the Chancellor of the Exchequer if he will list the occasions since January 2000 in which a HICP target of 2 per cent. plus or minus 1 per cent. would have failed to have been met, and would have occasioned a letter from the Governor of the Bank of England; and what conclusions he draws about such a target for the conduct of UK monetary policy. [120331]

[holding answer 19 June 2003]: The Monetary Policy Committee's target since 1997 has been RPIX inflation of 2½ per cent. Since 1997 the Governor has not had cause to write a letter because inflation has not deviated from the target by more than 1 percentage point.In his statement on 9 June, the Chancellor said that, the advantage of the internationally recognised index of consumer prices—HICP—is that it is a better measure, will improve the quality of our target, is in line with best international practice and is used by every other G7 nation but Japan and by our neighbours in Europe.