Ruairi Quinn (Dublin South East, Labour)
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Question 140: To ask the Minister for Finance the action he intends to take to protect consumers and business owners in view of the continuing rise of inflation; the inflation rate the Government is predicting for 2006 as a whole; and if he will make a statement on the matter. [32045/06]

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. A large proportion of the increase of the rate of annual inflation is due to external factors which the Government have no control of, such as the recent rises in interest rates by the ECB. On the EU comparable measure of inflation, the Harmonised Index of Consumer Prices (HICP) stood at 2.2 per cent in Ireland in September.

Maintaining a moderate rate of inflation remains a key priority of economic policy because of its importance in relation to competitiveness. The Government is taking positive actions to contain inflation by implementing responsible fiscal policies — for example, excise duties have not increased in the last two years — and we are promoting greater price competition by removing the Groceries Order. The pay increases agreed under "Towards 2016" will provide a predictable wage cost environment for the duration of the agreement. We are investing in public infrastructure which will enhance our ability to produce goods and services more efficiently and therefore support moderate inflation on continuing basis. We are also protecting lower income and more vulnerable consumers through the large increases in social welfare payments that we have already put in place.

In Budget 2006, the Department of Finance forecasted CPI inflation of 2.7% and HICP inflation of 2.0 per cent. However, this forecast was conducted using the technical assumption of unchanged interest rates. Since that time there have been four quarter-point interest rate increases and they account for most of the increase in the rate of inflation this year. The Department of Finance will be publishing revised inflation forecasts shortly.