HC Deb 30 January 1978 vol 943 cc13-4
9. Mr. Rathbone

asked the Secretary of State for Prices and Consumer Protection whether he will forecast the rate of price inflation at the end of 1978.

32. Dr. McDonald

asked the Secretary of State for Prices and Consumer Protection what is his present estimate of the likely trend in retail prices over the next 12 months.

Mr. Hattersley

I expect the annual rate of inflation to fall to single figures by the spring. The size of further reductions is crucially dependent upon the general level of wage settlements remaining within the Government's guidelines.

Mr. Rathbone

Will the Secretary of State confirm that other members of his Government and other Government forecasters agree with him? Will he inform the House of any other forecasters who do?

Mr. Hattersley

There is no reputable forecast that does not show that we will reach that level and remain at that figure for the rest of the year. There is no doubt of that.

Mr. Costain

When the Minister announces the figures, will he be fair to the House and point out that the increase is an 85 per cent. increase over the figures on which the Chancellor of the Exchequer based his famous 8.4 per cent. Even a single-figure inflation rate today is equal to more than 17 per cent. on the basic pound.

Mr. Hattersley

No. The practice in this country is to calculate the retail price index as the way of judging the level of inflation at any one time. I know that when the three-monthly annualised average painted a more gloomy picture Opposition Members chose that as their indicator. Now that it paints an advantageous picture they no longer use it. I propose to do what I have done for the last 18 months, which is to use the commonly accepted and most reputable indication of price increases. I refer to the RPI. On that basis my figures are absolutely correct.

Mr. Giles Shaw

Will the Secretary of State comment on the equally reputable and splendid figures given by the Prime Minister in his new year BBC broadcast in respect of 1979 in which he said that price inflation would be at 5 per cent. provided that wage inflation likewise was only 5 per cent? Does he endorse that?

Mr. Hattersley

The Prime Minister pointed out—and we must all continue to point it out—that the level of prices next year, which I believe has to be an improvement on that for this year, has an arithmetical relationship to wage increases over the same period. It seems to be no more than right that the Prime Minister and other members of the Government should make that simple fact known.