Dáil Éireann díospóireacht -
Wednesday, 23 Feb 2000

Vol. 515 No. 1

Written Answers. - Inflation Figures.

Derek McDowell

Ceist:

65 Mr. McDowell asked the Minister for Finance if he will make a statement on the implications for economic policy of the latest inflation figures for January 2000 showing annualised inflation running at 4%; the way in which this compares with the EU average; and if he will make a statement on the matter. [5249/00]

Minister for Finance (Mr. McCreevy):

The most recently published inflation figures for Ireland – January 2000 – show a year-on-year increase of 4.0% in the consumer price index – CPI – and a 4.4% increase in the harmonised index of consumer prices – HICP. The most recently published EU HICP was 1.7% for December; this compares with the December HICP figure of 3.9% for Ireland.

The recent increase in the rate of inflation reflects a number of factors which include the fall in the value of the euro, the increase in crude oil prices which have added over 1% to inflation, and the budget increase in excise duty on tobacco, which was introduced for health promotion purposes, and which has added about 0.75% to inflation.

Excluding the increases in oil prices and excise duty, which do not reflect the underlying trend, inflation in January was closer to 2%. As the impact of these special factors passes through it is expected that inflation will peak in the near future and inflation should fall through the second half of this year.

While I am, of course, monitoring the situation closely, the recent temporary increase in inflation has no significant implications for economic policy at this stage. The Government, of course, remains committed to ensuring that price and pay developments are consistent with sustaining competitiveness. In this context, the Government has just completed negotiations on a successor to Partnership 2000. Adherence to these pay terms should help ensure that the rise in inflation is only temporary, and that we can maintain economic and social progress.