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]
Vol. 522 No. 2
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]
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.
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 |
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 |
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 |
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 |
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 |
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 |
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 |