TNAG-0453-FCO40-518-Budget-of-Hong-Kong-1974-1975-1975 — Page 159

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and even the most authoritarian measures to obliterate

such internal inflation as does exist would only have a

modest impact on the rate at which consumer prices are rising.

(11) Consumer Price Index and foodstuffs

72.

In the Economic Background to the Budget publication, a whole chapter was devoted to consumer prices and this, supported as it was by a wide range of statistics, showed very clearly where the main pressures behind our current inflationary situation are to be located. It is in the area of foodstuffs that we have to look because expenditure on food items represents such a high proportion of household expenditure as a whole; and, because most of our food is imported, and because prices at the import level have increased so rapidly, it is clear that the principal forces at work in 1973 lay abroad (although, in the case of

marine fish and fresh vegetables, prices of domestic production were considerably influenced by abnormal - and I mean really abnormal

73.

weather conditions).

I should like to take this opportunity to undate the picture presented in the Economic Background publication, for

I have a suspicion that some honourable Members feel the situation has changed rather since the autumn of 1973 and that, somehow, purely local factors have, relatively speaking, grown in importance.

This is not the case.

The Economic

Background publication will, as I have already said, be rolled forward in the form of three interim reports during each year and I would like to quote some of the figures that are in the draft version of the first interim report which will appear next month.

74.

I shall use the General Consumer Price Index as my reference point and let me just say here that, although this index is being re-based, there are no grounds for assuming that the current index is a poor indicator of rates of change in the retail prices of the commodities and services in the basket. The index increased, on a seasonally adjusted basis, by 20.5% in the year ending February 1974. The retail prices of foodstuffs as measured by the index increased, however, by as much as 28% in this period,

/on.....