§ Mr. Wigley
To ask the Chancellor of the Exchequer what assessment he has made of the causes of the increase in manufacturers' output prices during 1989 and of the effect of the price rises on the economy.
§ Mr. Norman Lamont
The increase in manufacturers' output prices reflects exceptional growth of demand over the last two years. Inflation damages the economy by increasing uncertainty, discouraging investment, and reducing profitability. It undermines industrial relations and reduces confidence in the management of the economy, at home and abroad. The Government's tight monetary and fiscal policy will ensure that inflation falls.