Price Increases

HC Deb 05 December 1977 vol 940 cc508-9W

32. Mr. Wyn Roberts

asked the Secretary of State for Prices and Consumer Protection whether he is satisfied with the current rate of price inflation.

Mr. Maclennan

No. The annual rate at 14.1 per cent. in October is still too high, but it is falling fast.

34. Mr. Hardy

asked the Secretary of State for Prices and Consumer Protection what were the total numbers of price increases recorded by his Department during the last month for which figures are available and during the same month in 1975 and 1976.

Mr. Maclennan

The Government measure the rate on inflation through the monthly retail price index rather than through the numbers of price increases. The retail price index increased by 1.8 per cent. in October 1976 and 0.4 per cent. in October 1977. Larger manufacturing and service firms are required to prenotify price increases to the Price Commission, and I understand that recent notifications have been substantially fewer in number than in the same period last year.

Mr. Arthur Lewis

asked the Secretary of State for Prices and Consumer Protection whether, in the light of the concern of the Price Commission at the present arrangement whereby companies are able to claim an interim increase in their prices pending the Commission's inquiry which pre-empts its eventual reports, he will take action to alter the present situation.

Mr. Maclennan

No. We need to have more experience of the present policy before considering whether any changes need to be made to the safeguard arrangements.

Mr. Tierney

asked the Secretary of State for Prices and Consumer Protection why prices have risen by 13 per cent. to-14 per cent. over the past 12 months when wages have risen by only 8.8 per cent. in the same period.

Mr. Maclennan

Prices depend not only on labour costs but on other costs, including those of materials, which are heavily influenced by the exchange rate. All these costs take time to work their way through to retail prices. The length of this time lag depends on the length of the production and distribution process itself, and thus varies greatly from one industry to another. The main influence pushing up the rate of inflation in the first half of 1977 has been the severe fall in the £ in 1976. Inflation is now falling fast because the effects of this have now worked through, and because both pay and other costs have been held in check.