Bernard Durkan (Kildare North, Fine Gael)
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Question 183: To ask the Minister for Finance the action he has taken or proposes to take to combat inflation; and if he will make a statement on the matter. [22292/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Achieving a moderate rate of inflation is a key economic policy priority given its importance in helping to restore national competitiveness. Before outlining the Government's actions to achieve this objective, I would first draw the Deputy's attention to the fact that recent price developments have been driven primarily by external factors, namely the global rise in oil and food prices. It should be recognised that as a small open economy; Ireland is largely a price-taker which means that there are few direct measures we can use to reduce the inflationary impact of the global rise in commodity prices.

However, I would expect that there should be a moderation in Ireland's inflation rate later this year as the recent depreciation in Sterling is passed through. In addition, I would like to reassure the Deputy that the Government is committed to doing what it can to control inflation. In the short to medium term, this includes implementing responsible fiscal policies and promoting competition and increased price transparency through the work of the Competition Authority and the National Consumer Agency.

Over the longer term, the considerable investment in public infrastructure that the Government is undertaking as part of the National Development Plan will enhance our ability to produce more goods and services, which by improving the economy's efficiency should help to keep inflation in check.

Finally, from a competitiveness perspective, I would stress the importance of ensuring that the externally-driven price increases that we are currently experiencing are not exacerbated by internally generated second-round effects. Securing a sensible and sustainable outcome to the current round of pay talks will have an important role to play in this respect.