Joan Burton (Dublin West, Labour)
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Question 98: To ask the Minister for Finance his views on the recent increase in inflation to a three year high of 3.8% in April 2006 and the warnings that it could hit 5% by the end of 2006; if his Department has done an assessment of the likely implications for the economy of the increase in inflation; and if he will make a statement on the matter. [19261/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Inflation, as measured by annual changes in the Consumer Price Index (CPI), was 3.8% in April. A large proportion of the rise in the annual inflation rate is due to external factors such as higher oil prices and recent rises in interest rates by the ECB. On the assumption of unchanged interest rates, I expect inflation to moderate in the second half of the year.

Higher inflation would lead to a deterioration in our competitiveness. The Government is doing its bit to contain inflation by implementing responsible fiscal policies. In addition, we have not increased excise duties for the last two years, and we are promoting greater price competition by removing the Groceries Order. We are also looking for a reasonable wage deal in order to maintain and improve our international competitiveness. We are investing in public infrastructure which will enhance our ability to produce more goods and services and keep inflation down in the process.