Bernard Durkan (Kildare North, Fine Gael)
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Question 102: To ask the Minister for Finance the mechanism available to his Department to detect hidden inflation in the economy in the past 10 years; the information sought or received; and the action taken on foot on same. [31769/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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As the Deputy is aware, inflation in Ireland is measured using the Consumer Price Index (CPI). For EU comparisons, the Harmonised Index of Consumer Prices (HICP) is used. Both measures are comprehensive measures of inflation at the economy level and are widely recognised as such. The main difference between the two is the exclusion of mortgage interest from the HICP. My Department uses both measures to monitor inflation developments on an ongoing basis.

Achieving a moderate rate of inflation is a key economic policy priority given its importance in helping to restore national competitiveness. In recognition of this, the Government has and continues to take positive action to control inflation. Such action includes implementing responsible fiscal policies, promoting competition and increased price transparency through the work of the Competition Authority and the National Consumer Agency, along with considerable investment in public infrastructure under successive National Development Plans.

In addition, the Government continues to work with the Social Partners to ensure that externally-driven price increases do not become embedded in our system as that only creates a vicious cycle from which no one wins. In this respect, the willingness of the various parties to compromise and adopt a realistic approach to wage developments in the recent pay talks is commendable.