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Dáil Éireann debate -
Tuesday, 27 Jun 2000

Vol. 522 No. 2

Written Answers. - Inflation Figures.

Michael Finucane

Question:

58 Mr. Finucane asked the Minister for Finance the reason service inflation is so high; and if he will make a statement on the matter. [18094/00]

Ivor Callely

Question:

176 Mr. Callely asked the Minister for Finance if, further to Parliamentary Question No. 37 of 23 May 2000, he will list the issues associated with the increase in inflation referred to in the reply as an increase in underlying domestic inflation; if he will list each issue; the way in which this can be addressed; and if he will make a statement on the matter. [17896/00]

I propose to take Questions Nos. 58 and 176 together.

In my reply to Parliamentary Question No. 37 of 23 May 2000, I said that one of the factors behind the recent increase in inflation is an increase in underlying domestic inflation. Domestic inflation can be defined as price increases in areas such as services and related expenditure and alcoholic drinks where external influences such as import prices are not significant.

In the year to May 2000 alcohol prices increased by 5% while prices in the services sector rose by 6.4%. These price increases reflect either higher profit margins or higher input costs such as the cost of labour. Current information on the importance of these factors is not available. Our best assessment is that wages costs are increasing due to the tightness of the labour market and that these increases are adding to domestic inflation. Excessive profit margins in some sectors is also a contributing factor.

A full breakdown of the different components of the CPI follows, for information.

As regards the policy response, the best way to tackle domestic inflation is to improve competition where possible. Imbalances in the labour market which are fuelling wage increases must also be addressed.

Food prices rose by 1.3% in May, bringing the annual percentage change in the year to May to 3.2%. Price increases were recorded for lamb, poultry, potatoes and fresh vegetables, soft drinks, sweets and chocolates while the price of tomatoes and yoghurt fell.

Alcoholic drink prices rose by 1.2% in the month with increases across the board. The annual percentage increase fell marginally to 5.0%, contributing +0.65% to the overall annual consumer price index in the twelve months to May.
Cigarettes and related tobacco prices rose by 1.4% in May following the introduction of a general trade price increase. The annual increase in the 12 months to May was 17.1%.
Clothing and Footwear prices remained stable in May.
Fuel and light costs fell in May following a reduction in the cost of home heating oil. The annual percentage increase in the year to May has dropped significantly to 38% having reached a high of 62% in March.
The cost of housing increased by 2.2% in May. This was due to an increase in the cost of private rented accommodation and increases in mortgage interest repayments.
Durable goods prices rose marginally in May by 0.2%. There were increases in the cost of furniture and soft furnishings while the prices of crockery and glassware, cutlery and acoustic appliances fell.
Other goods increased by 0.5% in May following increases in the prices of comics, magazines and books, paper products such as toilet paper and kitchen paper, detergents and cleaning equipment, cosmetics and hair applications.
Transport costs fell by 0.5% in May following a fall in the price of motor fuels and air and boat fares, while the cost of motor insurance rose marginally. The annual percentage increase in the year to May was 8.3% down from 9.9% in the previous month.
Services and related expenditure rose marginally in May by 0.4% with increases in doctors and dentists fees, hairdressing charges, entertainment, education and training while telephone charges fell.
Consumer prices increased by 0.7% in May to bring the overall CPI to 110.1. This compares to an increase of 0.5% in May 1999. As a result, annual inflation in the twelve months to May was 5.2% compared to 4.9% in April 2000. The main factors causing the monthly increase were increased mortgage payments, higher private rental costs and increases in food, tobacco and alcohol prices.
Consumer Price Index
May 2000
TABLE 1 – FOOD

Item

Nov. 1996 baseexpenditure weights %

CurrentIndex

% change1 mth.

% change12 mths

TOTAL

22.8497

113.3

1.3

3.2

1.BEEF

1.0124

103.7

0.6

4.0

2.MUTTON/LAMB

0.4869

126.5

8.4

10.0

3.PORK

0.3829

97.6

1.0

3.6

4.BACON

0.8557

100.9

0.7

5.3

5.POULTRY

0.9482

100.1

1.8

0.4

6.COOKED MEAT

0.5328

111.8

0.8

5.1

7.SAUSAGES

0.2882

111.2

0.4

5.3

8.OTHER MEAT

0.3075

106.2

0.5

4.1

9.FRESH FISH

0.1926

121.1

1.2

12.3

10.FROZEN FISH

0.1509

118.9

0.3

6.5

11.SMOKED FISH

0.0291

103.8

1.2

4.7

TABLE 1 – FOOD (continued)

Item

Nov. 1996 baseexpenditure weights %

CurrentIndex

% change1 mth.

% change12 mths

12.TINNED FISH

0.0577

129.4

0.1

0.4

13.POTATOES

0.6146

144.6

14.7

22.2

14.TOMATOES

0.0679

136.8

5.3

21.2

15.OTHER FRESH VEGETABLES

0.5004

121.0

3.9

1.5

16.DRIED VEGETABLES

0.0124

120.7

1.2

8.9

17.TINNED VEGETABLES

0.1986

126.3

1.4

10.0

18.FROZEN VEGETABLES

0.2163

107.0

0.2

5.8

19.BREAD

1.2377

104.3

0.5

0.9

20.FLOUR

0.0868

103.3

0.3

2.6

21.BISCUITS

0.5189

116.1

0.4

3.8

22.CAKES

0.4911

114.2

1.6

5.6

23.PASTEURISED MILK

1.7399

101.5

0.0

2.7

24.OTHER MILK PRODUCTS

0.3647

105.8

4.1

2.7

25.CHEESE

0.3601

108.0

0.1

3.9

26.EGGS

0.2354

109.5

0.0

3.8

27.BUTTER

0.2705

103.4

0.0

2.2

28.MARGARINE

0.3033

126.5

0.9

8.6

29.OTHER FATS AND OILS

0.0869

121.5

0.8

5.7

30.FRESH FRUIT

0.7009

121.1

1.5

4.2

31.TINNED FRUIT

0.0538

107.0

0.1

2.1

32.DRIED FRUIT AND NUTS

0.0722

113.1

0.2

3.0

33.TEA

0.2999

123.1

1.2

7.3

34.COFFEE

0.1358

114.4

0.3

0.9

35.COCOA

0.0212

124.3

0.8

6.1

36.SUGAR

0.2075

101.4

0.1

0.1

37.BREAKFAST CEREALS

0.4263

140.2

0.4

9.5

38.OATMEAL

0.0230

98.2

2.1

2.2

39.OTHER CEREALS

0.1600

107.8

1.4

4.1

40.SAUCES AND MEAT EXTRACTS

0.3107

110.9

0.4

3.8

41.SOUPS

0.1468

116.9

1.1

3.9

42.PRESERVES

0.1320

110.8

0.3

3.8

43.SWEETS AND CHOCOLATE

0.9008

125.4

1.1

6.5

44.CUSTARD

0.0101

123.8

0.0

2.4

45.DESSERTS AND ICE CREAM

0.3728

110.2

0.5

3.9

46.BABY FOOD

0.0393

126.5

0.2

3.5

47.MISCELLANEOUS ITEMS

0.9014

110.7

0.4

3.1

48.SOFT DRINK

1,1075

114.8

1.1

5.7

49.MEALS OUT

4.2776

116.3

0.6

5.8

TABLE 2 – ALCOHOLIC DRINK

Item

Nov. 1996 baseexpenditure weights %

CurrentIndex

% change1 mth.

% change12 mths

TOTAL

12.6298

114.4

1.2

5.0

1.BEER

8.6190

115.0

1.3

5.2

2.SPIRITS

2.7137

113.3

1.3

4.3

3.WINE

1.2971

112.6

0.8

4.1

TABLE 3 – FUEL & LIGHT

Item

Nov. 1996 baseexpenditure weights %

CurrentIndex

% change1 mth.

% change12 mths

TOTAL

4.9038

106.9

0.5

7.1

1.FIRELIGHTERS

0.0761

101.9

1.1

0.4

2.COAL AND ANTRICITE

0.8595

112.9

0.0

4.7

3.TURF AND BRIQUETTES

0.3661

110.7

0.0

3.7

4.BOTTLED GAS

0.2881

114.9

0.2

8.5

5.PIPED GAS

0.4396

100.0

0.0

0.0

6.ELECTRICITY

2.0252

102.1

0.0

0.0

7.FUEL OIL

0.8491

111.8

2.6

38.0

TABLE 4 – HOUSING

Item

Nov. 1996 baseexpenditure weights %

CurrentIndex

% change1 mth.

% change12 mths

TOTAL

8.0385

96.0

2.2

4.1

1.RENTS

1.7518

124.8

2.7

10.5

2.LOCAL AUTHORITY CHARGE

0.2952

24.4

0.0

18.4

3.MORTGAGE INTEREST

3.6315

80.3

3.6

0.1

4.HOUSE INSURANCE

0.7311

110.2

0.7

4.4

5.REPAIRS AND DECORATION

1.6288

106.7

0.4

3.3

TABLE 5 – TRANSPORT

Item

Nov. 1996 baseexpenditure weights %

CurrentIndex

% change1 mth.

% change12 mths

TOTAL

13.9402

112.9

0.5

8.3

1.MOTOR CYCLES

0.0168

104.1

0.2

4.6

2.MOTOR CARS

3.9458

102.7

0.0

0.6

3.OTHER VEHICLES

0.1683

108.9

0.7

2.6

4.MOTOR REG AND TAX

0.8345

106.1

0.0

3.0

5.MOTOR INSURANCE

2.0077

122.0

0.6

10.6

6.MOTOR FUEL

4.1761

118.5

1.8

18.9

7.MOTOR OIL

0.0460

115.6

0.0

5.1

8.SPARE PARTS

0.5010

104.9

0.2

0.8

9.REPAIRS AND MAINTENANCE

0.6495

117.7

0.0

6.1

10.OTHER VEHICLE COSTS

0.0988

124.7

0.0

10.1

11.BUS FARES

0.6097

109.3

0.0

6.4

12.RAIL FARES

0.1790

113.2

0.0

4.8

13.COMBINED TRAVEL

0.1608

108.4

0.2

6.5

14.OTHER TRAVEL

0.5461

127.8

1.2

2.3

TABLE 6 – SERVICES AND RELATED EXPENDITURE

Item

Nov. 1996 baseexpenditure weights %

CurrentIndex

% change1 mth.

% change12 mths

TOTAL

16.7232

115.6

0.4

6.4

1.CINEMA

0.1774

115.6

0.0

3.8

2.DANCING

0.4527

113.4

0.2

2.1

3.OTHER ENTERTAINMENT

0.9787

120.9

1.1

7.2

4.EDUCATION AND TRAINING

1.6085

132.0

0.4

12.0

5.MEDICAL FEES

0.9729

125.6

2.3

8.3

6.MEDICINES AND DRUGS

0.5922

109.5

0.5

3.2

7.HOSPITAL CHARGES

0.1883

135.5

0.0

10.3

8.OTHER MEDICAL EXPENSES

1.3443

130.0

0.0

10.1

9.THERAPEUTIC EQUIPMENT

0.0573

110.2

0.0

2.3

10.HAIRDRESSING

1.0846

133.9

1.7

15.1

11.SHOE REPAIRS

0.0345

119.9

0.2

5.6

12.LAUNDRY & DRYCLEAN

0.1334

113.8

0.4

6.5

13.OTHER SERVICES

1.0860

132.5

0.2

16.7

14.POSTAGE

0.1352

99.3

0.0

0.0

15.TELEPHONES

1.8388

83.3

1.5

4.5

16.SOCIETY SUBSCRIPTIONS

0.5223

115.9

0.0

2.7

17.UNION SUBSCRIPTION

0.2626

109.4

0.5

4.9

18.TV RENTAL

0.4392

103.9

0.0

0.0

19.LICENCES

0.3871

101.6

0.0

0.0

20.ACCOMMODATION CHARGES

0.3180

120.8

3.2

5.0

21.PACKAGE HOLIDAYS

2.9161

110.0

0.4

4.3

22.OTHER EXPENDITURE

1.1929

107.8

0.7

3.0

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