Pearse Doherty (Donegal South West, Sinn Fein)
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219. To ask the Minister for Finance the forecast for inflation in Ireland for the years 2014, 2015 and 2016; if he will provide a model showing how a lower level of inflation and how a higher level of inflation would affect Ireland's economic forecast as per the medium term economic strategy's baseline economic assumptions. [13249/14]

Michael Noonan (Limerick City, Fine Gael)
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Inflation as measured by the Harmonised Index of Consumer Prices (HICP), the comparable measure of inflation across the euro area, was forecast for Ireland at 1.2 per cent in 2014 and 2.0 per cent respectively for 2015 and 2016 at Budget time.

There are a  number of channels through which price developments impact on the economy. For instance, higher inflation could lead to a decrease in the real level of  private consumption due to the decrease in real wages in the short term, all else being equal.  Higher inflation may also effect competitiveness and thus decrease exports and inward investment. Lower inflation would have the opposite impact.

My Department will publish a revised set of macroeconomic forecasts in the Stability Programme Update in April.