Retail Price Index (Hansard, 5 July 1976)

§ 2. Mr. Durant
asked the Secretary of State for Prices and Consumer Protection what the percentage increase was in the Retail Price Index over the past six months exclusive of seasonal foods; and what the increase was in each of the previous six-monthly periods.

§ The Under-Secretary of State for Prices and Consumer Protection (Mr. Robert Maclennan)
The increase between 11th November 1975 and 18th May 1976 in the Retail Price Index, excluding seasonal foods, was 6.7 per cent. Percentage increases for the periods November 1974 to May 1975 and May 1975 to November 1975 were 16.6 and 7.2 respectively.

§ Mr. Durant
While this shows a favourable trend, it is very disappointing considering that this is the key to the Government's strategy in controlling inflation. To what factors does the Minister attribute this rather disappointing set of figures?

§ Mr. Maclennan
There were certain changes in the Budget which affected the situation. Also, one must consider the overall position, and in the last nine months the rate of inflation has been almost halved.

§ Mrs. Sally Oppenheim
Will the Minister confirm that over the past six months, exclusive of seasonal food, there has been no appreciable drop in the rate of inflation and that, in fact, in the last month there has been an increase? This is not at all a healthy sign for the rest of the year. Can the hon. Gentleman say precisely by what amount the Budget changes influenced those figures?

§ Mr. Maclennan
The hon. Lady chooses whichever set of figures appears to suit her best, and she varies them from Question Time to Question Time. She is not, I hope, denying the month-by-month improvement which has occurred during the past nine months or that the rate of inflation has nearly halved during that period. The percentage change in the all-items index for May was only 1.1 per cent.

§ Mr. Giles Shaw
May I press the Minister to say how much of the increase was due to budgetary measures?

§ Mr. Maclennan
If the hon. Gentleman will put down a Question on that point, I shall consider it.

§ 13. Mr. Canavan
asked the Secretary of State for Prices and Consumer Protection what is the latest monthly rise in the Retail Price Index; and whether she will make a statement.

§ 23. Mr. Townsend
asked the Secretary of State for Prices and Consumer Protection by how much the Retail Price Index has risen since February 1974.

§ 24. Mr. Donald Stewart
asked the Secretary of State for Prices and Consumer Protection what is the latest rise in the Retail Price Index; and if she will make a statement.

§ 27. Mr. Jim Lester
asked the Secretary of State for Prices and Consumer Protection what is her latest estimate or the rate of price inflation.

§ Mrs. Shirley Williams
The monthly increase in the Retail Price Index to May 1976 was 1.1 per cent., and this brought the overall 12-month figure down to 15.4 per cent. Since February 1974, the index has risen by 52.6 per cent.

§ Mr. Canavan
In view of the Government's admission that the proposed relaxation of the Price Code will lead to an accelerated rise in the Retail Price Index, does my right hon. Friend agree that a considerable strain will be placed on the wages agreement? Does she agree that workers with restricted wages will, quite rightly, want stricter price control, and will tend to view inadequate price controls, such as are in the White Paper, as a capitulation to capitalism?

§ Mrs. Williams
With respect, my hon. Friend is wrong. In their forecasts of retail price indexing the Government allowed for some relaxation of the Price Code. They did so because unless we recover investment in the private and public sectors the country will have no long-term future. We believed—the trade unions agreed—that there should be some concessions, provided that they could clearly be seen as linked to new machinery, new investment and jobs.

§ Mr. Stewart
I accept the excellent advice that the right hon. Lady read out in reply to an earlier Question—namely, that no Government can set a Price Code aside while maintaining wage restraint. Is she aware that if she continues on the lines of her statement of last week, which was a breach of that policy, there will be every justification for the unions returning to free collective bargaining?

§ Mrs. Williams
It will not do for the hon. Member for the Western Isles (Mr. 937 Stewart) to talk in that unreasonable way. The effect of the relaxation of the Price Code is about 1 per cent. of the Retail Price Index. One of the cases we have before us, among others, relates to a major investment in Scotland, which is now going ahead. The hon. Gentleman must be more direct than he is now being.

§ Mr. Hordern
Will the right hon. Lady tell the House of any other major industrial country whose Retail Price Index has risen anywhere near as much as ours, and which industrial country has a price control policy similar to that operated in this country? Since the Public Expenditure White Paper is worked out on the basis that inflation will be in single figures by the end of the year, will the Secretary of State say when we may expect a revised Public Expenditure White Paper?

§ Mrs. Williams
The hon. Gentleman has put a great many supplementary questions, which I shall seek to answer as best I can. At a quick glance, the answer to the first part of his supplementary question is Italy and Ireland, if we take the OECD countries. There are indications that the level of inflation has picked up in other countries, but if the hon. Gentleman would like a full list he should table an appropriate Question. He will know that the revised Price Code is now before the House and that there is a consultation period until the middle of July.

§ Mrs. Sally Oppenheim
Will the right hon. Lady comment on the fact that the Chancellor of the Exchequer has once again had to revise his target for bringing down inflation, that it is now about six months behindhand and that inflation will not fall to much less than 12 per cent. by the end of this year and 7 per cent. by the end of next year? Does she not realise that, on the basis of the Chancellor's own forecasts, since this Government came to power inflation will have risen to a figure of 72 per cent. by the end of next year? Is this not a reflection of the fact that the Government are refusing to cut spending and borrowing adequately and soon enough?

§ Mrs. Williams
The hon. Lady makes a great many criticisms. I would not like to be as dogmatic as she is about the figures. She should examine what I said 938 at the last Question Time on this subject a month ago. If she turns up the Hansard for that date, she will see that I volunteered a full statement of what depreciation of the pound would mean in terms of a slippage in the target for single-figure inflation by the end of the year. I made that position clear to the House at the earliest possible moment. Nobody can be more precise than that. Nobody knows exactly what will happen to the pound. I have been pleased to see that in the last few days it has clearly stabilised.