Dáil debates

Wednesday, 11 October 2006

Ceisteanna — Questions

Consumer Price Index.

11:00 am

Photo of Trevor SargentTrevor Sargent (Dublin North, Green Party)
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Question 4: To ask the Taoiseach if he will report on the Central Statistics Office's recent publications regarding the consumer price index; and if he will make a statement on the matter. [30653/06]

Photo of Tom KittTom Kitt (Minister of State (Government Chief Whip), Department of An Taoiseach; Minister of State, Department of Defence; Dublin South, Fianna Fail)
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The latest consumer price index, CPI, publication refers to August 2006 when the annual rate of inflation was estimated at 4.5%, compared with 4.2% in July and 2.3% in August 2005. The current annual rates of over 4% are the highest recorded since early 2003 and are significantly higher than the average annual rates of 2.5% and 2.2% recorded in 2005 and 2004 respectively.

The most notable contributing changes in the year to August 2006 were increases in housing, water, electricity, gas and other fuels, up 16.9%, transport, up 5.2%, education, up 4.7%, restaurants and hotels, up 4.3% and health, up4.1%. Clothing and footwear fell by 3.6% and furnishings, household equipment and routine household maintenance fell by 1.2%.

The annual rate of inflation for goods was 1.7% in August while the corresponding rate for services was 7%.

The annual rate of inflation in August, as measured by the EU harmonised index of consumer prices, HICP, rose to 3.2% in August, up from 2.9% in July and 2.1% in August 2005. The differences between the CPI and HICP mainly reflect the exclusion of mortgage interest costs from the latter. Using the HICP, the overall annual rate of inflation for both Economic and Monetary Union, EMU, countries and the EU as a whole in August was 2.3%.

Photo of Trevor SargentTrevor Sargent (Dublin North, Green Party)
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Does theMinister of State agree that mortgage costs should be included in the CPI as personal debt is so high in the country? I recently read that, on average, every man woman and child in Ireland has personal debt of €32,000. Perhaps the Minister for Finance could update those figures for us. It is time to seek a more realistic CPI report, given the interest rates that will affect much of the aforementioned debt. This is in addition to an increase of 34% in gas costs and 20% in electricity. Is the Minister of State satisfied that the Government is getting the whole picture using the CPI as it currently exists? Can the CPI be broadened to include those real costs that affect people?

Photo of Tom KittTom Kitt (Minister of State (Government Chief Whip), Department of An Taoiseach; Minister of State, Department of Defence; Dublin South, Fianna Fail)
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There is a category that covers housing, water, electricity, gas and other fuels. The CPI also covers alcoholic beverages, clothing and footwear, furnishings, health, transport, communications, recreation and culture, education, restaurants and hotels and miscellaneous goods and services. The Minister for Social and Family Affairs has made provision to ensure that the vulnerable are helped at times like this. There are positive signs regarding oil prices that will be factored in when the next set of statistics are released. The CPI provides a comprehensive set of figures. If we considered the HICP, which excludes mortgages, we would be in a favourable position.

Photo of   John Curran John Curran (Dublin Mid West, Fianna Fail)
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The Minister of State indicated that 4.5% was the rate of inflation for August 2006 according to the CPI and he gave a breakdown of the various contributory components. From the information available, can he say what impact, if any, the removal of the groceries order has had?

Photo of Tom KittTom Kitt (Minister of State (Government Chief Whip), Department of An Taoiseach; Minister of State, Department of Defence; Dublin South, Fianna Fail)
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I have figures for the period January 2005 to date. April 2006 is highlighted as the first month for which data was available following the repeal of the groceries order in March 2006. It can be seen that prices for items affected and not affected by the groceries order increased up to May 2006. Since then items previously covered by the groceries order have fallen in price and are now showing a modest, overall annual decrease of 0.2%. Items that were never covered by the groceries order have continued to display increases and now show an annual increase of 3.5%.

In answer to Deputy Curran's question, items previously covered by the groceries order have fallen in price for the first time since the lifting of the groceries order.