Dáil Éireann debate -
Thursday, 30 Mar 2000

Vol. 517 No. 2

Written Answers. - Inflation Rates.

Brendan Howlin

Question:

28 Mr. Howlin asked the Minister for Finance if he will make a statement on the implications for economic policy of the latest inflation figures for January 2000 showing annualised inflation running in excess of 4%; and the way in which this compares with the EU average. [9345/00]

Bernard J. Durkan

Question:

37 Mr. Durkan asked the Minister for Finance if he and other Ministers in euro countries have had any discussions regarding inflation rates in Europe; the discussions, if any, he has had with euro bankers in this regard; and if he will make a statement on the matter. [9320/00]

Bernard J. Durkan

Question:

92 Mr. Durkan asked the Minister for Finance the extent to which he and his fellow EU Council Ministers have addressed the issue of the impact of inflation on individual member states; the methodology to be employed to deal with this; and if he will make a statement on the matter. [9423/00]

Bernard J. Durkan

Question:

94 Mr. Durkan asked the Minister for Finance the rate of inflation in each of the EU member states with particular reference to euro countries; and if he will make a statement on the matter. [9427/00]

Bernard J. Durkan

Question:

98 Mr. Durkan asked the Minister for Finance if he has satisfied himself that inflation rates in this country compare favourably with those in other euro states; and if he will make a statement on the matter. [9431/00]

Minister for Finance (Mr. McCreevy)

I propose to take Questions Nos. 28, 37, 92, 94 and 98 together.

The most recently published figures for February 2000 show a year-on-year increase on inflation in Ireland of 4.3% as measured by the Consumer Price Index and 4.6% as measured by the EU-Harmonised Index of Consumer Prices. EU inflation for the same period, as measured by the European Union Index of Consumer Prices, was 1.9%.

The latest data for each member state of the European Union are set out in the following table. Ireland's relatively high inflation rate is primarily due to: the increase in tobacco duties introduced in the budget for health reasons; the increase in crude oil prices combined with Ireland's relatively greater dependence on oil; relatively stronger imported inflation associated with the fall in the euro because Ireland has stronger trade links with countries outside the euro-area than other members of the EU.

Assuming that there is no further increase in oil prices and that the euro remains at current levels, I expect inflation to peak in the near future before declining in the second half of the year.

Accordingly, the large part of the inflation differential is expected to be temporary and has no significant implications for economic policy at this stage. However, services inflation is also higher in Ireland than elsewhere due to the strength of domestic demand. The Government is not complacent about these developments and is monitoring the situation closely. The Government's main concern is that the once-off increase in prices should not lead to wage developments that could damage our economic prospects. In this context adherence to the pay terms of the Programme for Prosperity and Fairness is essential.

Inflation in Europe is regularly discussed by European Union Finance Ministers as part of routine reviews of economic developments. These reviews include the examination of stability programmes and the annual broad economic policy guidelines process and in this context the inflation performance of individual countries is assessed using the HICP methodology.

EU Harmonised Index of Consumer Prices (HICP)

Annual % changes, February 2000

Austria	1.9
Belgium	2.1
Finland	2.7
France	1.5
Germany	2.1
Ireland	4.6
Italy	2.4
Luxembourg	2.6
Netherlands	1.5
Portugal	1.6
Spain	3.0
EMU (MUICP)	2.0
Denmark	2.8
Greece	2.6
Sweden	1.4
United Kingdom	1.0
EU-15 (EICP)	1.9