Price Increases (Hansard, 5 March 1979)

§ 5. Mr. Dykes
asked the Secretary of State for Prices and Consumer Protection what was the percentage movement in the retail price index in the last two quarters of 1978.

§ Mr. Hattersley
Compared with the previous quarter, the retail price index rose by 1.7 per cent. in both the third and fourth quarters of 1978.

§ Mr. Dykes
In view of those figures and the likely figures for January and the first quarter of this year, why are the Government so confidently promising the public that inflation will not go into double figures again this year? What factors have the Government taken into account in making that rather rash promise?

§ Mr. Hattersley
When the hon. Gentleman reads the figures in Hansard he will find that they are not as bad as his prepared supplementary question anticipated. The Government's reasons for what we have said about double-figure inflation are clear. It still remains within the power of the people and the Government to keep inflation at or about its present level. The decision about that is one for the Government and the people in partnership. We hope that the people, particularly through the wage claims that they will be pursuing in the next month or two, will demonstrate their determination to keep inflation within manageable proportions.

§ Mr. Gwilym Roberts
Does my right hon. Friend agree that the fundamental factor in this matter is the strength of the economy and the fact that the pound is therefore remaining strong? Does he agree that this will be reflected in costs and, therefore, wholesale prices in coming months, and that it is a common belief among most forecasters that inflation will not only remain in single figures for the rest of this year but will be considerably lower than some of the previous forecasts?

§ Mr. Hattersley
The facts to which my hon. Friend has referred are important. The pound remains strong and is stronger than it has been for the past two years. That will clearly have a beneficial effect on import prices and, therefore, on the rate of increase of inflation in general.

§ Mrs. Sally Oppenheim
As the rate of inflation has now established a clear upward trend, with a return to double-figure inflation being widely forecast, will the Secretary of State admit that the Government's counter-inflation policy is in ruins and that a further upsurge in inflation is likely as a result of the increase, among other things, in local authority rates, particularly the increases being proposed by Labour local authorities?

§ Mr. Hattersley
I agree with hardly anything that the hon. Lady said. Her forecasts of the changes in the rate of inflation have been uniquely bad over the past two years.

§ Mrs. Sally Oppenheim
They have not.

§ Mr. Hattersley
I apologise. The hon. Lady is right. Her forecasts have not been uniquely bad. The Leader of the Opposition said on Saturday that the Government's vaunted single-figure inflation rate was a nine month wonder—when it had already been in single figures for 13 months. Someone is even worse than the hon. Member for Gloucester (Mrs Oppenheim) in these matters.
The position is clear. It is possible for this country to maintain a rate of inflation at or about the present level as long as the country co-operates in bringing about the sort of policies that achieve that end. If the hon. Lady and her colleagues continue to predict massive increases in prices they will be creating the circumstances that they pretend to fear.