Pat Rabbitte (Dublin South West, Labour)
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Question 59: To ask the Minister for Enterprise, Trade and Employment the measures he intends to take to protect consumers and businesses from spiralling inflation; if adjustments in the budget allocations within his Department or its agencies are necessary in view of the prediction at the time of budget 2006 of average annual inflation of 2.7% compared to the expected situation of 5% by end of 2006; and if he will make a statement on the matter. [32040/06]

Micheál Martin (Cork South Central, Fianna Fail)
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The 2.7 per cent Consumer Price Index inflation forecast for 2006 was calculated on Budget day by the Department of Finance using the technical assumption of unchanged interest rates. Since that time the European Central Bank has raised interest rates four times by a quarter point on each occasion. Interest rate increases have a major impact on CPI inflation but are outside of the control of the Government. CPI inflation has averaged 3.8 per cent in the first eight months of the year. The Department of Finance will be publishing new forecasts in the coming weeks.

All developed economies face rising costs at some point in their supply chain and Ireland is no exception. Our best response to the realities of globalisation is to ensure that Ireland remains attractive for investment and enterprise growth. While the costs faced by business in some areas here may be relatively higher than other economies, the challenge is to maintain our competitiveness in areas such as skills, education, knowledge infrastructure and the quality generally of our workforce. In an international context, competitiveness, the ability to profitably and successfully trade against world competitors in the face of globalisation pressures while creating attractive investment and employment opportunities are the real benchmarks of a successful economy.

This Government is taking concrete steps to control Irish inflation. The wage element recently agreed in Towards 2016 will provide certainty and contribute to redressing the wage element of inflationary pressures. Also in the new Social Partnership agreement is a commitment to reactivating the Anti-Inflation Group, which will allow the social partners to cooperate and coordinate efforts in combating inflation.

Finally, I have no plans to alter either the Department's budget for 2006 nor the budgets of any of the agencies or bodies under its aegis on the basis of inflation.