Bernard Durkan (Kildare North, Fine Gael)
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Question 343: To ask the Minister for Finance his plans to address the cause or causes of hidden inflation; the extent to which inflation is causing the relocation of manufacturing jobs; and if he will make a statement on the matter. [10562/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Director General of the Central Statistics Office has sole responsibility for, and is independent in, deciding the statistical methodology and professional standards to be used in compiling the Consumer Price Index (CPI). The CPI is designed to measure the change in the average level of the prices paid by consumers for goods and services. It measures in index form the monthly changes in the cost of purchasing a representative basket of consumer goods and services.

Some of the high profile job losses recently seem to be due to the fortunes of individual companies rather than national competitiveness. However, we will of course remain vigilant and are committed to maintaining our competitiveness.

Employment growth has been extremely strong in recent years, and over 2 million people are now employed in Ireland. Unemployment has remained consistently low at below 4.5 per cent — essentially full employment. While the numbers employed in industries fell during the first half of 2006, employment in this sector increased significantly during the second half of the year. In this context, it is expected that jobs in this sector will be created to replace those that have been lost. Maintaining a moderate rate of inflation remains a key priority of economic policy because of its importance in restoring competitiveness.

Bernard Durkan (Kildare North, Fine Gael)
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Question 344: To ask the Minister for Finance the extent to which he has identified the cause or causes of recent inflation; and if he will make a statement on the matter. [10563/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Inflation, as measured by the CPI fell to 4.8 per cent in February from 5.2 per cent in January 2007. On a HICP basis inflation fell to 2.6 per cent in February from 2.9 per cent in January. The rate of CPI inflation has increased in the past year; this is mainly due to ECB interest rate increases which are outside of Government control. If mortgage interest was removed, CPI inflation would have measured 2.5 per cent in February. Annual goods inflation was unchanged in February but annual services sector inflation is currently running at 9.1 per cent and this is a cause for concern. It 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.