By the time Lamont was appointed Chancellor, the Conservative government's principal economic objective was to regain control of inflation. The Thatcher government had been elected in 1979 on a manifesto that had listed restoration of sound money as its first priority. Having peaked at 21.9% in 1980, inflation (as measured by the 12-month increase in the Retail Prices Index) fell to 3.3% at the beginning of 1988. However controlling inflation through the targeting of the growth of the domestic money supply, as proposed in that manifesto, turned out to be more problematic than its authors had envisaged and during his time as Chancellor, Lawson had increasingly been drawn instead to targeting the exchange rate to provide an external monetary anchor. From its low point in February 1988, inflation rose with apparent inexorability: of the 31 months until it peaked at 10.9% in October 1990, there were only four months when inflation fell. In response, interest rates were progressively increased, doubling from 7.4% in June 1988 to 15% in October 1988, being cut by one point to 14% when the pound entered the ERM, the level of interest rates Lamont inherited as chancellor. As a result, the economy began to slow, contracting by 1.1% in the third quarter of 1990 and shrinking a further 0.7% in the final quarter of the year. Thus Lamont's period as Chancellor started with inflation at its highest level since 1982 and the economy in recession.