Bernard Durkan (Kildare North, Fine Gael)
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Question 92: To ask the Tánaiste and Minister for Finance his plans to ensure continued confidence in the economy with particular reference to inflation; and if he will make a statement on the matter. [23543/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I will set out my pre-Budget outlook later this week. However, at this stage I can once again reiterate that I do not subscribe to the more gloomy views of the economy that are currently abroad. Inflation, as measured by the CPI was 4.6 per cent in the twelve months to September, down from 4.8 per cent in August 2007. Although the annual rate of inflation has increased in the past year, this has, to a large extent, been due to ECB interest rate increases which are outside Government control.

A better measure of inflation is the Harmonised Index of Consumer Prices (HICP) which excludes, amongst other things, mortgage interest. Including the impact of mortgage rate increases, as the CPI does, would not only mask the underlying inflation rate, but would also serve to highlight the short term impact of interest rate increases which are designed to bring down inflation. The increase in the HICP to September was 2.9 per cent. Achieving a moderate rate of inflation remains a key priority of economic policy. The Government is focusing on areas it can control and has taken and continues to take positive actions to contain inflation, particularly by implementing responsible fiscal policies and by promoting greater price competition.

I note that indicators of confidence in the Irish economy continue to remain strong, with the overall IIB Bank/ESRI Consumer Sentiment Index rising to 74.3 in September, from 72.0 in August. The ESRI report that consumers are becoming more positive in their perception of the outlook for the labour market, and in relation to current economic conditions.