Brian Cowen (Laois-Offaly, Fianna Fail)

Looking at the trend over a period of time, since we joined the euro area some years ago, the figures at the back end of last year showed, for the first time, a coming together of the European and the Irish average inflation. The Irish average inflation before that was much higher. Part of that is a function of domestic demand which is greater here than in European countries. One of the problems of the failure to reignite growth in continental European economies quite apart from the structural issues of their economies regarding the flexibility of labour markets etc. is the inability to create domestic demand. Domestic demand, while it has increased the composition of our economic growth in recent years, also brings with it the ability of people to spend their money. We have higher income earners than in many parts of the euro area.

The Deputy referred to gas and electricity prices. These are regulated industries and prices in these sectors are determined by regulators. Increases in recent years partly reflect the global increase in oil prices, over which we do not have control. If one looks at health and education, it should be noted that these sectors have relatively small weights in the basket of consumer goods and services and hence their impact on overall inflation is relatively low.

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