Inflation

Oral Answers to Questions — Prices and Consumer Protection – in the House of Commons at 12:00 am on 12th April 1976.

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Photo of Mr Timothy Renton Mr Timothy Renton , Mid Sussex 12:00 am, 12th April 1976

asked the Secretary of State for Prices and Consumer Protection what was the six-month annualised rate of inflation in the six months ending December 1975, January 1976 and February 1976.

Photo of Mrs Shirley Williams Mrs Shirley Williams , Hertford and Stevenage

Despite the fact that these three six-monthly periods comprised 25, 26 and 27 weeks respectively, the all-items index, less seasonal foods, which is the best trend indicator, has on an annualised basis steadily declined from 14·1 per cent. to 13·6 per cent. to 13·2 per cent.

Photo of Mr Timothy Renton Mr Timothy Renton , Mid Sussex

Is the Secretary of State aware that, including seasonal foods and drinks, the rate has gone in precisely the opposite direction—from 14 per cent. to between 14·1 per cent. and 14·9 per cent.? Is she not very alarmed at the steep rise in the prices of imported commodities? They averaged 20 per cent. in one month alone in the case, for example, of coffee, cocoa, copper and lead. In her Jekyll and Hyde rôle in the Cabinet, what action is the Secretary of State proposing to defend sterling in the coming months to ensure that imported inflation does not ruin the Chancellor's plans?

Photo of Mr George Thomas Mr George Thomas , Cardiff West

Order. Everyone will have observed that both questions and answers are developing into speeches today. This is not the time for debating.

Photo of Mrs Shirley Williams Mrs Shirley Williams , Hertford and Stevenage

On the first part of the question, I am using a period of six months, which is invariably used and which has been used by this Government from the beginning on questions on this subject. Seasonal factors inevitably show a rise in the winter and a fall in the summer and create difficulties in the statistical pattern. I am using the same statistics as I have used throughout on questions on this subject. That is the proper basis for comparison.

On the second part of the question, there is some indication of a hardening of certain commodities, particularly food and metals, quite apart from the effect of any decline in the value of the pound. The effect of the decline in the value of the pound on the Retail Price Index since 1972 when the float began is about 5 per cent. up to the present. This does not take account of certain changes which take longer to show their effect, but the pound inevitably reflects varying inflation rates and it is evident what the Government are trying to do about that.

Photo of Mr George Rodgers Mr George Rodgers , Chorley

Does my right hon. Friend agree that the impact of inflation is not consistent throughout the population? Because low income groups and large families have to pay a proportionately larger part of their income for energy, food and rent, they are hit much harder by inflation.

Photo of Mrs Shirley Williams Mrs Shirley Williams , Hertford and Stevenage

My hon. Friend is correct. That is why the Government have continued with both food subsidies and rent subsidies and have recently increased both during the period of the counter-inflation policy.

Photo of Mr Douglas Henderson Mr Douglas Henderson , Aberdeenshire East

Does the Secretary of State agree that the impact falls more heavily on different parts of the country, and that in north and north-east Scotland people are particularly hard hit because of the increase in transport charges? They are not protected by the London weighting allowances as are people here

Photo of Mrs Shirley Williams Mrs Shirley Williams , Hertford and Stevenage

There is some evidence that the pattern of regional pricing is rather more varied than the hon. Gentleman's question implies. It is not the case generally that Scottish prices are higher than prices throughout the rest of the United Kingdom.

Photo of Mr Ian Gow Mr Ian Gow , Eastbourne

asked the Secretary of State for Prices and Consumer Protection what is the most recent year on year rate of inflation.

Photo of Mr Gwilym Roberts Mr Gwilym Roberts , Cannock

asked the Secretary of State for Prices and Consumer Protection what are the latest figures available for the year to year and month to month rates of inflation; and if she will make a statement.

Photo of Mrs Shirley Williams Mrs Shirley Williams , Hertford and Stevenage

The February 1976 month on month increase in the Retail Price Index was 1·3 per cent. and this brought down the overall 12 month figure to 22·9 per cent.

Photo of Mr Ian Gow Mr Ian Gow , Eastbourne

To what extent does the right hon. Lady think that the unprecedented public sector borrowing requirement envisaged this year constitutes a real threat to the Government's anti-inflation policies?

Photo of Mrs Shirley Williams Mrs Shirley Williams , Hertford and Stevenage

No one would deny that the PSBR is very high and needs to be brought down. However, I do not think that that matter arises directly from the Question.

Photo of Mr Gwilym Roberts Mr Gwilym Roberts , Cannock

Will my right hon. Friend take this opportunity of agreeing with me—[HON. MEMBERS: "Oh".]—for once—that the forecasts made by the gloom-mongers of the Opposition or the long-haired Cambridge economic forecasters, that inflation will take off again in the long term, are not based on any reputable statistical evidence whatsoever?

Photo of Mrs Shirley Williams Mrs Shirley Williams , Hertford and Stevenage

I shall endeavour to take every opportunity to agree with my hon. Friend. On this occasion I should like to say that as this is a country that invariably presents the most gloomy view of its own achievements, it is worth mentioning that the cutting of the rate of inflation by more than half in one year is a pretty remarkable achievement in a democracy, even though we still have a long way to go.

Photo of Mr Giles Shaw Mr Giles Shaw , Pudsey

Will the right hon. Lady take this opportunity of reminding the House that it was neither long-haired Cambridge economists nor Opposition Members but her right hon. Friend the Chancellor of the Exchequer who predicted a rate of inflation of 8·4 per cent.?

Photo of Mrs Shirley Williams Mrs Shirley Williams , Hertford and Stevenage

The Chancellor was predicting a figure which was borne out on a three-monthly basis. The Opposition are not at all averse to using a three-monthly basis if they choose.

Photo of Mr Eric Heffer Mr Eric Heffer , Liverpool, Walton

What effect has the CAP had on our inflation? By how much have food prices risen as a result of the CAP?

Photo of Mrs Shirley Williams Mrs Shirley Williams , Hertford and Stevenage

The effect of the CAP settlement on the food index—not on the RPI—was about 1¼ per cent. That must be added to a transitional policy stage increase of about 1 per cent. The effect on the RPI is therefore about 0·5 per cent.