Commodity Prices

HC Deb 28 January 1974 vol 868 cc26-7

25. Mr. Skeet

asked the Secretary of State for Trade and Industry if he will make a further statement on the trend in commodity prices.

Mr. Peter Walker

Between December 1972 and December 1973 the Economist World Commodity Price Index rose from 170.2 to 269; in the previous nine years the index rose by 70.2. In the last year alone it has risen by 98.8. The latest announced increases in oil prices will have a further impact in the first months of 1974.

Mr. Skeet

Can my right hon. Friend indicate what part of the annual deficit is now attributable to world commodity price increases? Has not the whole position been exacerbated by cartels formed by producers getting together, as in oil and phosphates, and making difficulties for industrialised countries?

Mr. Walker

In last year's adverse terms of trade, the difference between the increases in export prices and in import prices accounted for about 80 per cent. of the increase in the deficit. Unity of action by commodity producers is certainly very important in its effect upon present and future prices.

Sir John Hall

Can my right hon. Friend state what has been the rise in world food prices over the same period?

Mr. Walker

Not without notice.

Mr. Dykes

Will my right hon. Friend confirm yet again that the deficit would have been less than half of what it was in 1973 but for the severe rise in marginal food commodity prices, and that the non-oil deficit this year in normal circumstances would have been expected by all economic commentators to be substantially less but for the actions of certain self-centred trade union leaders?

Mr. Walker

There was an adverse effect by all these influences on our balance of trade last year. The figures in my original answer showed that commodity prices rose far more last year than in the previous nine years put together. They are indicative of the effects.

Mr. Elystan Morgan

As the rise in commodity prices has been fairly constant in the last 12 months, and this was well known to the right hon. Gentleman, why was he so euphoric about our balance of trade prospects up to last October?

Mr. Walker

The hon. Gentleman is completely wrong. There has been a substantial rise in world commodity prices in the last 12 months.

Mr. Morgan

Not in the last 12 months.

Mr. Walker

In the last three months there has been a considerable increase in oil prices.