Bernard Durkan (Kildare North, Fine Gael)
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Question 89: To ask the Minister for Finance the extent to which he has identified by reference to the consumer price index or other mechanisms the precise cause or causes of inflation in the economy in each of the past ten years to date; the precise degree of inflation in each of the contributory causes; the degree to which he proposes to address such issues directly with a view to restoration of competitiveness throughout the economy in the near future; and if he will make a statement on the matter. [25993/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Over much of the last decade, inflation in Ireland exceeded that in the euro area as a whole. Some of this was due to convergence effects. Exchange rate movements also had an impact. In addition, the strength of demand and the low level of unemployment pushed up domestic prices.

Over the last two years this situation has reversed. On a year-on-year basis the consumer price index (CPI) fell by 1.1 per cent in the twelve months to May, while the harmonised index of consumer price (HICP) fell by 1.9 per cent over the same period. The declines are very broad-based, with falls recorded across 9 of the 12 main CPI sub groups. Many prices in the services sector are showing an unprecedented year-on-year decline too. Between 2008 and 2010, the European Commission expects consumer prices to have risen by about two per cent in the euro area but to have fallen by about 3 per cent in Ireland. This is helping to bring about a welcome improvement in Irish competitiveness at this time.