Louis J. Belton
Ceist:73 Mr. Belton asked the Minister for Finance if he has estimated the effect of the weakness of the euro on the consumer price index; if he can quantify the effect; and if he will make a statement on the matter. [23640/00]
Written Answers. - Euro Strength.
The value of the euro has fallen by around 28% against the dollar and 18% against sterling since its launch on 1 January 1999.
The latest trade data indicate that import prices increased by roughly 9% in the seven months to July 2000 compared with the same period of 1999. Import prices are higher due to higher international prices, including the increase in international oil prices, and the weakness of the euro. These trade data include goods for final consumption as well as goods for further production and capital goods. Higher import prices for consumption goods add directly to inflation as measured by the Consumer Price Index, CPI, while imported goods for further production can add to inflation indirectly by pushing up production costs.
However, it is difficult to separate the exchange rate effects from changes in the international prices of imports. Secondly, a large proportion of the imported goods are not consumed directly, but are rather imputs to production, and it is difficult to be precise about the proportion of overall consumption which imports constitute. Accordingly, it is not possible to accurately assess the impact of the changes in the euro exchange rate on the consumer price index.