HC Deb 29 June 1978 vol 952 cc1547-8
1. Mr. Neubert

asked the Chancellor of the Exchequer whether he will detail those economic factors which will have an upward influence on the retail price index within the next 12 months.

The Chief Secretary to the Treasury (Mr. Joel Barnett)

A variety of factors may have an upward influence on the retail prices index over the next 12 months: the level of wage settlements, however, will undoubtedly be of vital importance in deciding whether the index rises, falls or remains around the same level over the period.

Mr. Neubert

Can the Chief Secretary deny that, with inflationary factors already at work in the economy, among which can be numbered the recent expansion in the money supply, the increase in total earnings of 15 per cent. and the rise in mortgage rates, to men- tion only three, the rate of inflation will be rising again before the end of the year and will go even higher in 1979?

Mr. Barnett

I do not know why the Opposition are always apparently so eager to believe that the rate of inflation will be in double figures. The Prime Minister and the Secretary of State for Prices and Consumer Protection have said that for the rest of this year the rate of inflation will be in single figures. I endorse that view. What will happen next year depends on many other factors.

Mr. Anderson

Will my right hon. Friend confirm that if the Government had not opted to put up the employer's national insurance contribution but had opted for other alternatives, including an increase in VAT, those would have had a more immediate and lasting effect on the RPI?

Mr. Barnett

My hon. Friend is absolutely right. This only shows what we get from the Opposition—on the one hand apparent concern about the rate of inflation and on the other deliberate intent to get us to increase it.

Mr. Tapsell

Does the right hon. Gentleman agree, however, that the three-month annualised rate is in double figures, that the six-month underlying trend turned sharply upwards in April and has continued upwards, and that even the year-on-year trend has only one better month to go before it too turns upwards, on even the most optimistic assumptions about the future movement of commodity prices and sterling?

Mr. Barnett

What I did notice was the way in which the hon. Gentleman deliberately juggled his question. What he has done is take the three-months basis in one case and the six-months basis in another. With the greatest respect, the position is as I have described it.