The forecast for producer-price inflation is underpinned by the prospect of further marked improvement in unit labour cost performance. Lower wage settlements have still to feed through fully into earnings, and productivity will continue to recover.
Is it not true that if producer-price inflation dropped to 1½ per cent., it would mean that the economy was flat on its back? Is it not also true that if the economy took off, inflation would inevitably rise because Britain has lost its productive capacity?
I suggest to the hon. Gentleman that economies such as Germany and Japan, which have low producer-price inflation, can hardly be described as flat on their backs—far from it. Low inflation of both retail and producer prices is more likely to lead to sound economic growth.
Will the Chief Secretary have a word with the Prime Minister when he returns and tell him to desist from the practice of continually switching to the measure of inflation which gives the Government the greatest short-run presentational benefits? They switch from headline inflation to core inflation to underlying inflation and now to the new measure of factory gate inflation. To most people in the street, that means that the price of factory gates has fallen but nothing else. I understand that the word "portillo" means factory gate in Spanish, unless my Castilian has been struck by lightning. Perhaps that is one reason why the Government use that measure—I do not know—but I should be grateful if the Minister would have a word with the Prime Minister and tell him to stop trying to deceive the British public.
The hon. Gentleman's complaint should be with not the Prime Minister but his hon. Friend the Member for Workington (Mr. Campbell-Savours), who asked the question about producer-price inflation. I am entitled to reply by pointing out that producer-price inflation, which was down to 2.7 per cent. in May, is the lowest for some 23 years. That is surely good news which the whole House welcomes.