T.U.C. ADVISORY COMMITTEE
Notes on Post-war Food Problems
IV Food Price Control
The control of food prices during the present conflict has been so successful that it has passed almost unnoticed by the general public. But to anyone who cares to consult the history of the last war the immense benefit derived from price control will be evident. Throughout the first world war there were continual disputes arising out of the ever-mounting cost of living. In this war the stabilisation of the cost of living has contributed greatly to that national unity which has been one of the principal factors in the successful conduct of the war.
Stabilisation of the Cost of Living
As the attached chart shows, in the first world war the Cost of Living Index rose almost continually. At the end of the war living costs were more than double what they were at the beginning. This rise, moreover, continued during the period of post-war inflation in spite of belated attempts at control. The Cost of Living Index at its peak at the end of 1920 stood at more than 2 1/2 times the 1914 level. Deflation followed, bringing unemployment and widespread suffering; but even then at the end of 1923 the Cost of Living Index still stood at nearly 80 per cent. higher than pre-war.
The course of events this time has been very different. At the beginning of the war the Cost of Living Index rose rapidly but price controls were progressively applied and in April 1941 it was decided to stabilise the cost of living. As the chart shows, this policy has been effectively carried out. The Cost of Living Index has never risen more than 30 per cent. above the pre-war level. This does not mean that all living costs have been kept down as low as this, since the Index covers only the most important foods and articles entering into the cost of living. But the fact remains that instead of prices spiralling upwards, as they did during and after the first world war, they have this time been effectively curbed.
If this Stabilistation policy had not been followed, there would have been continuous applications for increased wages. Wages increases on account of price increases, never in practice keep pace with price increases. But the reverse of the picture is that if there are substantial wage increases, price stabilisation will have lost its main purpose, namely, to keep the whole price structure stable and to enable the country to enter the post-war period with a good chance to re-establish its export trade.
Methods of Food Price Control
Food prices make up more than half of the items entering into the cost of living. Approximately 90% of the foods bought by the average housewife are now controlled. The methods of control vary in detail according to the nature of the commodity. Broadly speaking though, much the same general methods are employed throughout. The Government purchases the food from home producers or from overseas and puts it into the distributive system at a determined price. To prevent this price from rising we have had recourse to subsidies on a large