Ivor Callely
Question:22 Mr. Callely asked the Minister for Finance the steps necessary to ensure the recent rise in inflation is only temporary; and if he will make a statement on the matter. [17886/00]
Written Answers. - Inflation Rate.
Bernard J. Durkan
Question:42 Mr. Durkan asked the Minister for Finance if his attention has been drawn to the recent indications of higher than average EU inflation levels; if he will take any corrective action to ensure that the budgetary provisions of the current and previous years are not eroded; if he has satisfied himself that such inflation levels are sustainable in the EU and euro zone with particular reference for the need to maintain our economic position; and if he will make a statement on the matter. [18102/00]
Bernard J. Durkan
Question:202 Mr. Durkan asked the Minister for Finance when he expects a slow down in inflation to take place; and if he will make a statement on the matter. [18475/00]
I propose to take Questions Nos. 22, 42 and 202 together.
The most recently published inflation figures for Ireland which relate to May show a year-on-year increase of 5.2 % in the Consumer Price Index, CPI. Inflation is 5.1 % on the basis of the Harmonised Index of Consumer Prices, HICP. This compares with 1.9 % for the Euro-11.
The inflation rate is now much higher than had been expected, and represents a disappointment to the Government. I expect a further uptake in inflation in the short-term because of recent energy price developments and the recent increase in interest rates by the European Central Bank. However, as once-off and external factors become less important inflation will begin to fall, although the timing of this decline will depend, to a large extent, on developments in our exchange rate and the price of oil.
As a consequence, I am confident that this period of higher than expected inflation will prove to be temporary and that improvements in public service provision envisaged over the period of the Programme for Prosperity and Fairness will not be compromised.
In order to sustain our competitiveness and economic prospects it is essential that Irish costs do not rise at a faster rate than our main trading partners unless matched by faster productivity growth.