§ Mr. Austin MitchellTo ask the Chancellor of the Exchequer if he will estimate the effect of(a) an increase of 10 per cent. in house prices and (b) an increase of 10 per cent. in the import price of manufactures on the rate of inflation. [38020]
§ Mrs. Angela KnightHouse prices have a direct impact on retail prices index inflation through their effect on the following components: mortgage interest payments, depreciation, ground rent and estate agents' fees. The weights can be found in the Office for National Statistics RPI business monitor, MM23. These components include lagged values of house prices, so the initial effect of a rise in house prices is much smaller than the sum of the weights of these components.
The impact on inflation of a rise or fall in import prices depends on the extent to which import costs are passed through to retail prices.