Bernard Durkan (Kildare North, Fine Gael)
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Question 211: To ask the Tánaiste and Minister for Finance the extent to which he has been able to isolate and address the inflationary trends not reflected in the CPI; the way this will affect budget 2008; and if he will make a statement on the matter. [24042/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Consumer Price Index (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. 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).

Inflation, as measured by the CPI was 4.6 per cent in the twelve months to September 2007, down from 4.8 per cent in August. 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. If mortgage interest was removed, CPI inflation would have measured 2.6 per cent in the twelve months to September. Maintaining a moderate rate of inflation remains a key priority of economic policy because of its importance with regard to competitiveness.