Bernard Durkan (Kildare North, Fine Gael)
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Question 257: To ask the Minister for Finance his proposals to combat inflation; and if he will make a statement on the matter. [4404/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Inflation, as measured by the average annual change in the Consumer Price Index (CPI), was 4.0 per cent for the year 2006 as a whole. A large proportion of the rise in the annual inflation rate in 2006 was due to external factors, primarily rises in interest rates by the ECB.

Maintaining a moderate rate of inflation remains a key priority of economic policy because of its importance in restoring competitiveness. The Government is focusing on areas it can control and taking positive actions to contain inflation by implementing responsible fiscal policies. For example, we have not increased excise duties for the last three years, apart from tobacco excise, which was done for sound health policy reasons. We are promoting greater price competition through various measures. We are also investing in public infrastructure, as evidenced by the recently announced National Development Plan, which will enhance our ability to produce more goods and services and, by improving the economy's efficiency, keep inflation down. In addition, we recognise that services sector inflation is a cause for concern and this highlights the need for more competition in the economy as well as for pay and profit restraint in all sectors in order to keep our cost base down. We must ensure that the wage increases granted under the Social Partnership agreement, Towards 2016, are reflected in productivity gains.