Dáil Éireann Debate, Wednesday - 15 June 2016
219. Deputy Bernard J. Durkan asked the Minister for Jobs, Enterprise and Innovation if she has identified indicators of inflationary tendencies which will affect economic growth; and if she will make a statement on the matter. [16311/16]
View answerCosts, prices and inflation levels are a key element of Ireland’s international competitiveness. The National Competitiveness Council recently published their annual Costs of Doing Business report which examines a range of enterprise costs that are largely domestically determined such as labour, property, transport, energy, water, waste, communications, credit, and business services.
The Council concluded that while Ireland’s cost base has improved across a range of metrics over the last five years - making Ireland a more attractive location for firms to base their operations in - Ireland remains a relatively high cost location for a number of key business inputs. A range of upward cost pressures, however, are also evident, particularly in relation to property and business services.
More generally, the overall Consumer Prices Index (CPI) published by the Central Statistics Office shows that prices on average remained unchanged in May compared with May 2015. On a monthly basis, price increases were also muted - and the CPI increased by just 0.5 per cent in the month. Within the CPI, however, there are a number of developments worth noting.
Miscellaneous Goods & Service prices increased by 5.6 per cent in the year - primarily due to higher dwelling, motor and health insurance premiums. Within this, motor insurance increased by 35.2 per cent in the year. Not only did the “Miscellaneous” category have the highest rate of inflation, it also contributed most to the overall inflation rate due to its weighting in the consumer basket.
The price of education services increased by 3.8 per cent, mainly due to the extra costs associated with participating in third level education while Restaurants and Hotel prices rose by 2.1 per cent mainly due to an increase in the cost of hotel accommodation and higher prices for alcoholic drinks and food consumed in licensed premises, restaurants, and cafes.
Significant price decreases were recorded in Transport (-5.3%), Furnishings, Household Equipment & Routine Household Maintenance (-3.1%), Communications (-1.2%) and Food & Non-Alcoholic Beverages (-1.1%).
According to the CSO, Transport prices fell mainly due to lower petrol and diesel prices, a reduction in the price of motor cars and a fall in air fares. Prices for Food and Non-Alcoholic Beverages decreased mainly due to lower prices across a range of products such as meat, chocolate and confectionery, milk, cheese, eggs and bread and cereals.
The report of the National Competitiveness Council is a timely reminder of the risks of complacency regarding our cost competitiveness. To protect the gains achieved to date, to sustain the recovery, and to ultimately spread the benefits of economic growth to all, we must continue to enhance all aspects of our cost competitiveness. The policy implications of the Costs of Doing Business report and the associated reforms required to address Ireland’s cost base, will be included in the Council’s annual Competitiveness Challenge report which will be brought to Government and published later this year.
