Written answers

Thursday, 19 November 2009

Department of Finance

Consumer Price Index

5:00 pm

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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Question 80: To ask the Minister for Finance the basis for his statement on a programme (details supplied) on 13 November 2009 of the breakdown of the deflation rate among pensioners, unemployed people and so on; if he will publish the information available to him for each of these categories; the source of these figures; and the methodology used to calculate them. [42472/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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The Central Statistics Office (CSO) produces a single Consumer Price Index (CPI), and does not produce a price index by head of household type or by household income. The CSO determines the Consumer Price Index (CPI) using average weights constructed with reference to the 2004-05 Household Budget Survey (HBS). Using generally recognised techniques, my Department has examined the impact of recent price falls on households by head of household type and income decile. My Department's analysis is based on these publicly available data and the CSO's latest CPI release. For various technical reasons, not least the changed pattern of expenditure since the last HBS, the results of this analysis are subject to qualifications. Nevertheless, this analysis suggests that average prices are falling for households in all income deciles and all household types (retired, unemployed, etc.). This work is ongoing and will be updated as more price data become available.

Notwithstanding my Departments analysis, it is a fact that the CPI fell by 6.6 per cent in the twelve months to October 2009. Some of this can be explained by the large falls in mortgage interest costs since this time last year. However, since the start of the summer the falls in prices have become more broadly based. In year-on-year terms, clothing and footwear prices are now down 13 per cent, food is down by 6 per cent and energy costs are down by about 11 per cent. So either way it is reasonable to state that all households are seeing their real incomes being somewhat protected by the falls in prices and that some sectors of the community are experiencing this to a different extent than others.

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