§ Mr. Lathamasked the Chancellor of the Exchequer to what factors he attributes recent sharp increases in the rate of inflation; why this has exceeded the expectations which he announced in his budget statement; and when he expects to resume progress towards the Government's ultimate objective of price stability.
§ Mr. Peter Rees[pursuant to his reply, 24 June 1985, c. 324]: The recent rise in retail price inflation is mainly attributable to the rise in mortgage interest rates during 1985 and the fall in sterling in the latter part of last year and the beginning of this year. This fall in the exchange rate, since reversed, appears to have had a somewhat larger impact on domestic prices than was anticipated a few months ago. I remain confident that the rate of inflation will fall during the second half of 1985, as forecast in the Budget.