Terence Flanagan (Dublin North East, Fine Gael)
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Question 99: To ask the Minister for Finance if he will deal with a matter (details supplied) regarding the rising cost of everyday living; and if he will make a statement on the matter. [23424/11]

Michael Noonan (Limerick City, Fine Gael)
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The Deputy will be aware that through 2009 and 2010, there were few inflationary pressures. Indeed, price levels fell, with the CPI declining by 4.5% in 2009 and 1% in 2010, and the HICP falling by 1.7% and 1.6% respectively. In the latter months of 2010 and to date in 2011, the main drivers of inflation have been insurance premium hikes and increases in the price of commodities. The CPI has also been affected by increases in mortgage rates.

In August 2011, the annual rate of increase in the CPI was 2.2% and 1.0% in the HICP. This rate of inflation is the lowest in Europe meaning prices in general here are growing at a slower rate than in any other European country.

Specifically, I would like to address Mr. Gibson's (Mr. Gibson of Dublin 13 was in touch with Deputy Flanagan on this matter) concerns regarding Government policy to improve the cost of living and escalating food and petrol prices.

The Government is keenly aware that people are under financial pressure in the current economic environment. To counter that, the Government is encouraging increased competition in the domestic areas of the economy. For example, the reduced VAT rate was introduced to lower prices for a range of services connected to the hospitality and tourism sectors.

In relation to food prices, the latest CSO information for the grouping 'Food and Non-Alcoholic Beverages' shows that prices are equivalent here to mid-2007 levels and are over 7% lower than the peak seen in 2008.

Petrol prices have increased substantially in recent months mainly related to increased oil prices on international markets so Government policy is limited in what it can do to alleviate price pressures in this regard.

The overall picture remains one where muted domestic demand and considerable spare capacity in the economy are expected to keep underlying Irish inflation in check for some time to come. Therefore, modest price rises will assist in restoring our relative competitive position globally.