Surveillance standard set on price rises

Press, 16 February 1984, Page 3

Surveillance standard set on price rises

PA Wellington Traders who limit price rises after the freeze to the present rates of inflation — 3.6 per cent last year — will be probably exempt from a Trade and Industry Department investigation.

This is indicated in a memorandum to staff of the department by its secretary, Mr Harry Clark. He made the memorandum public yesterday. It sets out the way in which the department intends t<? run the new price surveillance scheme. The scheme will come after the lifting of the wageprice freeze. It stipulates that price rises proposed by big companies be monitored by the department and restricts them to no more than two increases for individual items in the 12 months after the freeze. Manufacturers whose annual turnover is more than $lO million, and suppliers of services whose annual turnover exceeds $3 million will have to notify the department 20 working days in advance of any proposed price rise.

Mr Clark’s memorandum notes that the new regulation under which the surveillance scheme will run does not restrict price increases to any specific level.

Neither does it lay down

any firm cost-plus formula for determining price rises. “The department should not. therefore, from either a policy or a legal point of view, be establishing arbitrary policy criteria in these respects," Mr Clark said. Nor did the regulations say that all price notifications had to be investigated in detail. Therefore, screening and assessment procedures had been developed to help the department efficiently administer the scheme.

Initial screening would focus on the extent of the proposed price rise. If it was in line with the present annual movement in the consumers price index, the notification should not in general need further study, Mr Clark said.

Inflation for the 1983 year, as measured by the consumers price index, was 3.6 per cent.

Where traders want to raise prices beyond that screening level, the department will then examine the basis for the proposed increase.

Full investigations will follow where necessary but interim approval may be given for price rises if the department thinks that that is appropriate.