Inflation (Hansard, 9 February 1984)

§ 8. Mr. Jessel
asked the Chancellor of the Exchequer what is the latest information he has of the rate of inflation.

§ Mr. Lawson
Over the 12 months to December 1983 the retail price index increased by 5.3 per cent.

§ Mr. Jessel
Although a 5.3 per cent. rate of inflation is obviously a tremendous improvement compared with the peak rate of 27 per cent. under the previous Labour Government, is it not still too high, especially for the elderly, who see their savings being gradually eroded? Will the Government persevere in their resolve and determination to reduce inflation still further?

§ Mr. Lawson
Yes, Sir. Inflation is too high, not merely for the elderly, but for everyone else as well. That is why the Government will continue to give the highest priority to reducing inflation still further, with the ultimate objective of price stability.

§ Mr. Wrigglesworth
Although we would all support that objective, what does the Chancellor of the Exchequer see as the connection between the public sector borrowing requirement and inflation, given the budget deficit of the United States of America and its apparent lack of impact on inflation there?

§ Mr. Lawson
The United States of America has been able to finance a very large budget deficit so far without inflationary consequences, due to the special status of the dollar as an international reserve currency and the willingness of people throughout the world to export funds to the United States. Whether that is a healthy development is another matter. Whether it is a sustainable position is already a matter of some uncertainty and debate within the United States.