Bernard Durkan (Kildare North, Fine Gael)
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Question 92: To ask the Tánaiste and Minister for Finance the extent to which he expects to combat inflation over the coming months; and if he will make a statement on the matter. [15851/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Inflation, as measured by the Consumer Price Index (CPI), has risen by 5.0 per cent in the twelve months to March 2008. The main contributions to this increase, in order of importance were: housing, water, electricity, gas and other fuels (which includes mortgage repayments) contributing just over 2.0 per cent; food and non-alcoholic beverages contributing almost 1.1 per cent; and transport contributing 0.75 per cent. Therefore, out of the twelve categories comprising the basket of goods that make up the CPI, three contributed almost 80 per cent of the total inflation in the twelve months to March 2008.

In terms of the inflation impact from last year's interest rate increases, I addressed this in this year's Budget when I increased the ceiling on mortgage interest relief for first time buyers. This I believe is the appropriate targeted response to such specific cost pressures. To the extent that inflation is externally-driven — such as through commodity prices — it is essential that such increases are not exacerbated by generating second-round effects through inflation-chasing pay settlements. To do so will only further adversely impact on Ireland's competitiveness. In the sectors that contribute to domestically-generated inflation, pay and profit margin restraint are essential, as well as increased competition so as to keep down price increases. Therefore it is essential that the upcoming pay talks under the Social Partnership agreement, Towards 2016, take account of the reality that we all face.

Bernard Durkan (Kildare North, Fine Gael)
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Question 93: To ask the Tánaiste and Minister for Finance if he has fully examined the factors contributing to inflation with particular reference to price rises not visible in the consumer price index; the measures taken or proposed to address the issue; and if he will make a statement on the matter. [15852/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The main contributions to the annual increase of 5.0 per cent in CPI over the 12 months to March 2008, in order of importance were: housing, water, electricity, gas and other fuels contributing just over 2.0 per cent; food and non-alcoholic beverages contributing almost 1.1 per cent; and transport contributing 0.75 per cent. Therefore out of the twelve categories comprising the basket of goods that make up the CPI, three contributed almost 80 per cent of the total inflation in the twelve months to March 2008. 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 has full independence when — deciding the statistical methodology and professional standards to be used in compiling the CPI.

However, it must be acknowledged that we have no control over some of the factors influencing the CPI — such as commodity prices, the exchange rate and mortgage interest rates. In this regard, we must always seek to ensure that our domestic cost base does not undermine competitiveness. Seeking to maintain low inflation, the pursuit of a sensible incomes policy, and keeping public spending growth at sustainable levels in the medium term are important. Doing this will allow us to keep the burden of taxation low, thus helping to maintain competitiveness and to maximise our economic potential.