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incurred additional costs in 1973 and that they were entitled to make allowance for this in their prices. Furthermore, in a period when other people's money incomes are rising, it is reasonable that the trader should be able to increase his absolute, but not his percentage, margin to allow for an increased contribution to his own trading surplus. I can hear my honourable Friend already retorting that, accepting this, it nonetheless represents a source of internally generated inflation.
102.
Well, he may be right but the practical point to be considered is this: has there really been "profiteering" in the case of beef when allowance has been made for these factors? And, incidentally, I am ignoring certain conceptual problems here such as the fact that import and wholesale prices are expressed in relation to dressed weight (which includes bones and so on) whereas the retail prices relate to saleable weight. This fact alone can be
expected to result in absolute increases in retail prices being higher than the absolute increases in wholesale prices. Ignoring this point, as my honourable Friend chose to do, it can be shown that the increase in the absolute margin of the retail price over the wholesale price in 1973 (HK$28 per picul) amounted to 10.3%. But what of the total
in quantity terms.
contribution to the retailers' overheads and profits in 1973? The Economic Background publication shows that, in the twelve
of beef declined months to September 1973, the consumption
There was also a decline for 1973 as a whole (of over 11%). When allowance is made for this, but still ignoring the conceptual point I have already mentioned, it is estimated that the total contribution to retailers' overheads and profits declined by about 2%. We still do not know how much of the total contribution is absorbed by costs, of course, but, on this arithmetic, it could easily be concluded that total retail profits on beef were actually lower in 1973 than in 1972. I do not wish
to press this too far because the assumptions are rather tenuous, but I trust I have demonstrated, using the same figures as my honourable Friend that, whether or not there has been profiteering" in this instance depends very much on the criteria adopted. I must confess that I would
not be prepared to level an accusing finger at Hong Kong's
/beef
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