Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

103. To ask the Minister for Finance if he has identified inflationary tendencies within the economy; his plans to address same; and if he will make a statement on the matter. [23880/17]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Over the past few years consumer price inflation has been near zero in Ireland and in the euro area more generally. In 2016 annual inflation in Ireland - as measured by the Harmonised Index of Consumer Prices (HICP) was slightly negative at -0.2 per cent.

However, in Ireland and in the euro area, there are signs that inflation is starting to pick-up gradually as the drag on consumer prices from low oil prices has eased.  However, consumer prices in Ireland are still relatively low due to previous euro-sterling exchange rate developments, as the UK accounts for a large proportion of imported consumer goods into Ireland.  

Looking forward, futures markets for oil are suggesting a further gradual but modest recovery in oil prices over the course of 2017. In addition, the continued growth in domestic demand and the ongoing recovery in the labour market are expected to lead to further services price inflation. Taking all these factors into account, price pressures will likely rise gradually but remain subdued into 2017. In the Stability Programme Update 2017, my Department forecast HICP annual inflation of 0.6 per cent for this year, rising gradually to 1.2 per cent in 2018.  

While consumer price inflation is not expected to rise dramatically over the near term, my Department continues to monitor inflation developments very closely. In that regard, this government will continue to implement competitiveness oriented policies which is the best way domestically to counteract any inflationary tendencies and potential loss of competitiveness.