NEW PRICES UNCERTAIN

Chronicle (Levin), 15 August 1947, Page 7

NEW PRICES UNCERTAIN

Press Association)

Tea 6s 2d Per Pound; Sugar • . May Be 7d

(Per

WELLINGTON, August 14. Preliminary figunng is being done by costing accountants and 1 mterested economists on the- probable. impact of the withdrawal or reduetion . of subsidies on various commodities and services, the proposed extent of which the Minister of finance (Mr. Nash) haS now revealed. > In somie instances the extra- cost of goods to the consunxer will, be .slight. m others there must be a -co'nsiderable rise in prices. ■ • ■ Almost exactly half of the present total subsidies paid — £13,750,000 — will within the next year be met directly out of the public's pocket instead oi being routed from taxation through the Consolidated- Eund to the producers and others who now receive the subsidies concerned. Whether any corresponding reduetion in. taxation will be made has not yet been revealed. Be that as it may, the public's immediate concern is; how mueh are ~ the goods affected going to cost in future? At this stage the ciuestion eannot be answered accurately; in some instances because there has been insuliicient detaii so far in the Minister 's announcement and in others because the eifeei of the reduetion of subsidies on freight rates cannot be gauged yet. However, some estimates of the inereases in prices lilcely to result from the removal of subsidies on the in dividual lines alone, without regard (fo the new freight rates or other faetors, have largely been made. The estimate pubiished in the Evening Post that sugar would ou this basis rise to "as rnuch as 7d a pouud" was cpnlirmed from auotlier source yesterday, except that th6 latter estimate is that the uew price must be at least 6-|d and probably 7d a pound. Mr. Nash has already warnea the publicthat the price of tea woitld rise to 6s 2d a pound retail on the removal of the subsidy. As far as cheese- is concerned, the uew price might be eitlier the full value that Britain is paying for our product, or the true pay-out price (the gtiaranteed price plus the subsidy). The general effect is expeeted to'be a rise of about 4d a pouud tliroughout the rang-e of cheeses. When the subsidy was liftcd from hani, that commodity rose by 4d a pouud, aud it is expeeted that wlien the subsidy is withdrawn from bacon.to the extent of £200,000 a year there would be a similar increase in" cost to ihe consuiner. Removal of £30,000 worth of subsidy on oatmeal and i-plled oats, it is estimated will meau pnlv a small increase of about ld a pound. No reliable estimate eau be given at this stage of {the increase likely in tobacco aud cigarette prices as the result ot losing £500,000 subsidy, but it has-already been stated that the in crease would be slight. Nor can the effect of the withdrawal of the subsidies on appics and jipars (inciudiiig eases and wraps) and oh lemori cases be even roughly gauged yet. It has not been made cleai whether the wraps referred to inpludc strawboard packing, and the new freight charges ^ght- liave- a consider able bearing on the future prices oi these lines. A major concern Of the housekeepei will be the new prices for meat witn the removal of more than £1,000,00 subsidy. However, none of the mea , traders consulted could give even a rough idea of whai; the effe.ct.will he. Oue thing obvious is that the con sunier will need a, higher faee value on meat coupons if the present level oi rationed consumption is to be inain tained. Meat coupons are the only ones under rationing which limit the amount of money that can be. spent on the rationed goods, although the pur pose is, of course, to limit the quantity eonsumed. If the present consumption level is satisfactory from the Governnient 's point of view, an increase in coupon value must follovv auy increase in retaii •price for that eousumiition to be con tinued. Most goods on the 'market will be aft'ected to some extent by the inevit able increases in freight "rates by sea and rail. lYhether the. eff'eet on costs into the retail shops may be passed on to the consumer will be a matter fothe Price Investigation Tribnnal. Indeed, as Mr. Nash has said, prices will not be altered, even in respect tc goods from which subsidies are being removed, without the approval of the fribunal or other recognised authority, and changes will not be eff'ective' until the necessary orders liave been issued.