Ciarán Cuffe (Dún Laoghaire, Green Party)
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Question 110: To ask the Minister for Finance his views on the circumstances that have seen the annual rate of inflation double in a 16 month period. [33193/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Inflation, as measured by annual changes in the Consumer Price Index (CPI), was 4.0 per cent in September down from 4.5 per cent in August. The average annual rate of inflation for the first nine months of the year was 3.8 per cent compared to an annual average rate of 2.5 per cent for 2005 as a whole.

A large part of the recent pick-up in the annual inflation rate is due to external factors such as higher oil prices and interest rate increases by the ECB.

On Budget day, my Department forecast that CPI inflation would average 2.7 per cent in 2006. This forecast was based on the usual technical assumption of unchanged interest rates. My Department will publish updated forecasts in the coming weeks.