Retail Price Index (Hansard, 17 July 1978)

§ 16. Mr. David Price
asked the Secretary of State for Prices and Consumer Protection what have been the changes in the retail price index at annualised rates over the last three months, the last six months and the last 12 months, respectively.

§ 32. Mr. Dodsworth
asked the Secretary of State for Prices and Consumer Protection whether he will give the increase in the retail price index, all items, over the last three months expressed at an annual rate.

§ Mr. Hattersley
The 12-month increase in the retail price index has been 7.4 per cent. to June. The index has risen at an annual rate of 11.7 per cent. in the last three months, and 9.6 per cent. over the last six months.

§ Mr. Price
Does not the Secretary of State's reply illustrate that we are in the numbers game here? Will he tell the 21 House which of the various periods selected gives the fairest interpretation of the ongoing rate of inflation? Does he realise that we can play with figures as we like but that the reality of what goes on in ordinary shops reflects our views on the rate of inflation? I assure him that it is still going up.

§ Mr. Hattersley
Of course, it is still going up. If I am taking part in the numbers game contest, I am doing so because I answered the hon. Gentleman's Question exactly. If he wants me to choose one index, I choose the index that I regarded as the right measurement in good months and bad for the last two years. When the annual RPI was running at 26 per cent., I said with reluctance that was the best measure of inflation. Now that it is running at 7.4 per cent., I say the same thing. It is the best measure of inflation. It is others—notably Opposition Members—who have chosen whatever index from month to month happens best to make their party case.

§ Mr. Dodsworth
Does the Minister accept that in my constituency a person who bought an annual season ticket in June this year would pay £400 whereas precisely 12 months previously it was £298? That is a rate of increase of 34 per cent. The facts are on the record. If we want to be very charitable and kind and divide it by two, because it covers two years, it is still 16 per cent. Those rates of increase are intolerable to the ordinary commuter. Does the right hon. Gentleman regard that as a success or a failure of the operation of the Price Commission or as none of its business at all?

§ Mr. Hattersley
I do not regard it as a great act of charity to divide two years' price increases by two to get the annual figure. That seems to me to be elementary arithmetical prudence.
Regarding the 16 per cent. increase in rail fares to which the hon. Gentleman referred, of course I regret the need over the last three years to try to get the nationalised industries back into balance. But that need stems from the Conservative Government's decision to run them at a deficit in the hope of currying some popularity in doing so. We are getting the nationalised industries back on to a break-even basis, and that is our duty.

§ Mr. Mike Thomas
Are not the two critical, truthful and important statistics about the rate of inflation, first, that when we came to power in February 1974 inflation was 16.9 per cent. and rising and that it is now 7.4 per cent. and at least stable and probably falling and, secondly—the Opposition do not like this —that it is now below the OECD average and below the rate of the majority of OECD countries?

§ Mr. Hattersley
That is all absolutely true. I should add that before we came to power the Conservative Government knew and anticipated that the rate of inflation would rise, according to their policies, to about 25 per cent. during the next year.

§ Mrs. Sally Oppenheim
Does the Secretary of State accept that the Opposition entirely accept that he wants to make the most of what is probably his last opportunity to answer Questions from us for many years to come? Before he gets carried away with the flow of his own pomposity, as he has already said in many speeches that he knows precisely what factors will affect the inflation rate for the rest of this year, will he say what the inflation rate will be at its highest point this year? Will it be 8 per cent., 8.8 per cent., 9.9 per cent. or 10 per cent?

§ Mr. Gwilym Roberts
We know its highest point this year.

§ Mr. Hattersley
My hon. Friend the Member for Cannock (Mr. Roberts) is right. I know what its highest point will be this year because we passed it on the way down four months ago. I think that the question that the hon. Lady was struggling to ask was what would be the highest point between now and Christmas. The facts for that period are as I described them in Birmingham six weeks ago. The inflation rate will fluctuate around that April figure, which was 7.9 per cent. What happens after Christmas will depend upon the policies we apply between now and Christmas. It is my earnest hope and belief that we shall continue the improvement next year. As for this year, however, in spite of the strange denials of the judgment that the hon. Lady made five weeks ago, that 7.9 per cent. figure is how it is and it is how it will remain.