HC Deb 15 November 1976 vol 919 cc902-4
2. Mr. Rathbone

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

11. Mr. Gow

asked the Secretary of State for Prices and Consumer Protection what is the latest year-on-year rate of increase in prices.

22. Mr. Townsend

asked the Secretary of State for Prices and Consumer Protection how much prices have increased since February 1974.

Mr. Hattersley

The annual increase in the retail price index was 14.7 per cent. to October 1976. The increase since February 1974 was 60.8 per cent.

Mr. Rathbone

Is the right hon. Gentleman aware that that reply comes unhappily from a Government who boasted that they would keep inflation down to 8.4 per cent. to gain electoral victory in October 1974, that it compares with a German inflation rate of 3.8 per cent., and that the country is appalled at a Government who inherited a 100p pound bringing about a situation in which it buys only 63p worth of clothing, food and everything else?

Mr. Hattersley

I wish that we had inherited a 100p pound. I wish, too, that we had inherited a number of other things that would help us in our fight against inflation. Furthermore, I wish that we had inherited a public sector borrowing requirement which had not increased at the rate it did under the Tories in past years. What we inherited was an economy that was in greater imbalance than anything that happened since the war. As a result there was a substantial increase in prices in the early part of 1974, but between August last year and the present time there has been a substantial deceleration in the inflation rate. I have no doubt at all that after a period of stability that deceleration will continue. It will continue because of the success of the social contract. The Conservatives should decide whether they want to see that success and the social contract continue.

Mr. Gow

Is the right hon. Gentleman not familiar with the letter of 18th December 1975 from the Chancellor of the Exchequer to Dr. Johannes Witteveen, in which the Chancellor said that by the end of this year the rate of increases in prices, year-on-year, would be under 10 per cent.? If the Secretary of State is familiar with that letter, will he say when the Chancellor's forecast will come about?

Mr. Hattersley

There is a later Question on that subject, but in order that the Opposition may limit their hooting I shall answer it now, with apologies to the hon. Member who put down the later Question. We have not proceeded as quickly along this road as we had hoped. I would not pretend anything else. There have been a number of difficulties. The depreciation of sterling is one and, more immediately, the drought has been another. The Opposition must decide whether they will support policies that will eventually result in the Government's aim being achieved or whether they regard their proper position as simply to cheer when things go wrong.