§ Mr. Austin Mitchellasked the Minister of Agriculture, Fisheries and Food whether his assumption about the limited effect of a devaluation of the green pound on the retail price of food and on the retail price index applies equally to a straightforward devaluation ; and, if not, whether he would expect prices to rise by more or by less.
§ Mr. Buchanan-SmithThere is no link between the two effects. The object of the system of green rates and monetary compensatory amounts is to insulate the prices of the products concerned from exchange rate movements. Accordingly a devaluation of the green pound affects only the prices of products covered by that system.
A depreciation of sterling, on the other hand, influences the prices of a much wider range of food products and in a way which is more variable between products, usually more indirect, and impossible to quantify at all precisely.