Written answers

Wednesday, 8 December 2021

Photo of Jackie CahillJackie Cahill (Tipperary, Fianna Fail)
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47. To ask the Minister for Finance if he will provide details of the way the consumer price index has changed annually in Ireland from 2008 to 2021, in tabular form; and if he will make a statement on the matter. [60586/21]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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While the annual rate of inflation in Ireland has surged this year, inflation has been relatively subdued over the past two decades (see Table 1). Indeed, in 2020 the actual price level, as indicated by the Harmonised Index of Consumer Prices (HICP), was almost 20 per cent below the price level had inflation grown at 2 per cent over the 2008-2020 period.

Low inflation over the last decade can in part be explained by the impacts of the global financial crisis. The recovery from the crisis was slow, with considerable labour market slack likely weighing on demand and in turn inflation over the past decade. Additionally, a number of structural factors have been identified as potential drivers of the disinflationary trends seen across advanced economies more generally in recent decades. These include globalisation, in particular China’s membership of the World Trade Organisation, the integration of global supply chains and demographic change.

The Covid-19 pandemic exacerbated the low inflation trends seen in recent years. While the pandemic was both a demand- and supply-side shock, in the immediate aftermath of the outbreak, the decline in demand outstripped the fall in supply such that the net impact on prices was deflationary. While inflation remained subdued in Ireland in the first quarter of 2021, inflation has since picked up, with the annual rate of inflation reaching 5.4 per cent in November – the highest rate in over two decades. Similar trends have been recorded across advanced economies, with inflation in the euro area hitting an all-time high of 4.9 per cent in November.

The recent rise in inflation however is partly explained by global factors, many of which are expected to prove temporary in nature. These include ‘base effects’ associated with normalisation of oil prices, recent commodity price developments, disruptions to global supply chains triggered by the pandemic as well as more general imbalances between supply and demand that have emerged across advanced economies following re-opening. Looking ahead, inflation is expected to moderate over the course of next year as temporary factors fade, demand stabilises and supply pressures ease. However, the recent emergence of the Omicron variant means there is now increased uncertainty about the inflation outlook.

Table 1 below shows the annual percentage change in both the Consumer Price Index (CPI) and the Harmonised Index of Consumer Prices (HICP) over the period 2008-2020. The full year data for 2021 will only be available when the December figures are published. Both the CPI and HICP indices measure the average price level of a fixed basket of goods and services. The primary difference between the two measures is the basket of goods and services covered, for instance mortgage interest is not included in the HICP. Additionally, the HICP, as a harmonised measure, is very useful for cross-country comparison. In general, however, the two measures move closely together.

Table 1: Annual rate of inflation

Annual % change Consumer Price Index (CPI) Harmonised Index of Consumer Prices (HICP)
2008 4.1 3.1
2009 -4.5 -1.7
2010 -1 -1.6
2011 2.6 1.2
2012 1.7 1.9
2013 0.5 0.5
2014 0.2 0.3
2015 -0.3 0.0
2016 0.0 -0.2
2017 0.4 0.3
2018 0.5 0.7
2019 0.9 0.9
2020 -0.3 -0.5


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