asked the Minister for Economic Planning and Development the inflation figure expected for the current year; whether his expectations in this regard are in line with his earlier forecasts and, if not, the reasons for the change.
Ceisteanna—Questions. Oral Answers. - Inflation Figure.
19.
The Deputy will be aware that the consumer price index rose by 4¼ per cent in the three months to mid-February 1979. The National Prices Commission attribute this sharp increase in part to certain non-recurring factors and predict that the quarterly increase for February/May should be lower.
I am satisfied that there will be progressive reductions in the rate of inflation in the remaining two quarters of the year in line with the inflation objective for 1979, provided the preconditions set out in the White Paper are met.
In view of the known annual rate of inflation to mid-February of some 10.8 per cent and the Minister's acceptance here this afternoon that the annual rate to mid-May 1979 is likely to be in excess of that figure, would he agree that the annual rate of inflation at the end of the year would be in the region of 12 per cent, taking into account anticipated oil price increases, wage cost increases and other factors?
I would not agree that it would be in the region of 12 per cent on an annual basis at the end of the year. While it is clear that the rate of increase for the 12 months as a whole will be greater than in 1978, I would not wish to try to predict a precise figure at this juncture. I must go back to the point I made earlier, that while in part some of the price development this year is outside our control and may or may not develop in a particular manner—we are not in a position to influence oil prices—there is a significant area of price increase which is within our own control. The more we think in terms of the worst happening, the more likely it is that the worst will happen. Whereas, if we tackle the problem positively, seek to identify the maximum improvement which can be made in this area and adopt the action appropriate to bring about that improvement, we will not have the type of inflation rate to which the Deputy refers. In those circumstances it would also be possible to get the rate of inflation down to a rate of 5 per cent or thereabouts by the end of this year, that is an increase in the last quarter of this year of somewhere in the region of 1¼ per cent. That is feasible and it is appropriate that we should seek to direct our actions along those lines.
In his reply the Minister said that the quite substantial decrease in the quarter most recently reported was due to the inclusion of non-recurring items——
The budget.
——and I should like to know if the partial removal of the subsidies is a non-recurring item in that sense?
Yes, I indicated that in my earlier reply. I told the House that part of the non-recurring factors were the budget increases and the sharp increase in the price of potatoes.
When the remainder of the subsidies are removed will that not be a "recurring factor"?
I am not aware of any suggestion that subsidies are likely to be altered in the course of 1979.
So the Government do not have any intention in the course of this year to further diminish the subsidies? Can the country take it as being a definite Government intention not to reduce the subsidies any more?
I am not aware of any suggestion.
That will occur next year pushing up the cost of living then.
If the Deputy wishes to debate everything at once he may try to do so but I never found that very good.
The Minister was talking about non-recurring items.
We were talking about 1979 and the trend of prices in 1979. I am responding to questions relating to 1979. If the Deputy wishes to rush all over the place, that is his privilege; but I have no intention of pursuing him. I regard that as a waste of energy and one ought to conserve energy nowadays.
Will the Minister give his grounds for rejecting a forecasted rate of 12 per cent when he has accepted 10.8 per cent in mid-February and has said that the rate of inflation to mid-May will be somewhat higher—at least 11 per cent or 12 per cent? Taking into account anticipated increases in the price of oil, anticipated wage-cost increases, which one must anticipate, and agricultural price adjustments in the Community, is my comment on 12 per cent unrealistic?
Taking account of the factors mentioned by the Deputy it is still possible to have a lower rate of inflation—a falling rate—by the end of the year.
I must confess that it would be like the miracle of the loaves and fishes.
The remaining questions will appear on next Tuesday's Order Paper.