Seymour Crawford
Question:143 Mr. Crawford asked the Minister for Finance his proposals for an anti-inflation plan. [5453/03]
Written Answers - Inflation Levels.
Bernard J. Durkan
Question:156 Mr. Durkan asked the Minister for Finance the extent to which he has measured inflation rates here against the rates in other Eurozone countries; the reasons for the substantially higher cost of living here; and if he will make a statement on the matter. [5403/03]
Ruairí Quinn
Question:168 Mr. Quinn asked the Minister for Finance the projected level of inflation for 2003 based on the latest information available to his Department; the way in which this compares with the projected EU average; the impact he expects the anti-inflationary measures agreed in the recent national talks to have on the consumer price index; and if he will make a statement on the matter. [5379/03]
I propose to take Questions Nos. 143, 156 and 168 together.
On budget day, inflation, as measured by annual changes in the consumer price index, CPI, was projected to average 4.8% in 2003. This forecast was, as always, based on the technical assumption of unchanged interest rates. Since budget day, the ECB cut interest rates, and this will have a favourable impact on the CPI this year. My Department will publish a Revised Estimate in the Economic Review and Outlook in the summer.
In terms of EU comparisons, the appropriate measure of inflation is the harmonised index of consumer prices, HICP. HICP inflation for Ireland for 2003 as a whole was forecast to be 4.2% on budget day. The most recent international forecasts for inflation in the EU are those of the OECD, published in December 2002, which estimate that HICP inflation in the euro area will be 2.2% this year.
For a variety of reasons, Irish inflation has been exceeding the EU norm for some time. This has been due partly to external factors, partly to the process of Ireland catching up in growth terms with the rest of Europe and partly to domestic factors. This last reason is where we must concentrate our efforts.
In this context, the adoption of the pay arrangements set out under the draft new social partnership agreement, Sustaining Progress, is important. By ensuring that wage increases are kept to sustainable levels we can continue to focus on our competitiveness and avoid losing jobs. Also important will be the implementation over the next 18 months of the anti-inflation initiative agreed by Government, employers and union leaders, to target key domestic sources of inflationary pressure.