Bernard J. Durkan
Question:204 Mr. Durkan asked the Minister for Finance if his Department has concluded that house prices are having an effect on inflationary tendencies in the economy; and if he will make a statement on the matter. [18477/00]
Written Answers. - Inflation Rate.
Mortgage interest costs are included in the CPI. Accordingly, for a given interest rate, higher house prices – if based on higher borrowings – will add to inflation as measured by the CPI. My Department accepts that higher house prices will also have an indirect effect through the extent to which they may prompt demands for higher pay increases. However my Department has not sought to establish the extent of this relationship.