§ Mr. John Grantasked the Chancellor of the Exchequer if he will estimate in percentage terms the extent to which price rises in 1979, as recorded by his Department's retail price index, were affected, respectively, by labour costs, the rise in manufacturers' materials and fuels, the effects of Budget changes and higher interest rates reflecting Government monetary measures.
§ Mr. BiffenThe rise in prices in 1979 reflected several factors, including past increases in money supply and the effects of the one-off switch from direct to indirect taxes in the June budget and the impact of Government measures designed to reduce the PSBR and re-establish control over the money supply. (The latter included overdue rises in "administered" prices—such as nationalised industry charges—and the rise in interest rates and hence the mortgage rate.)
It is not possible to quantify the contribution of each individual factor to the recorded change in the retail price index.