Written Answers. - Inflation Rate.

Thursday, 1 March 1990

Dáil Éireann Debate
Vol. 396 No. 5

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  57.  Mr. Flood  Information on Chris Flood  Zoom on Chris Flood   asked the Minister for Finance  Information on Albert Reynolds  Zoom on Albert Reynolds   the annual rate of inflation for each of the years from 1983 to 1989, inclusive; the action he is taking to reduce the current rate of inflation; and if he will make a statement on the matter.

Minister for Finance (Mr. A. Reynolds): Information on Albert Reynolds  Zoom on Albert Reynolds  The average increase in the consumer price index (CPI) in each of these years was as follows: 1983, 10.4 per cent; 1984, 8.6 per cent; 1985, 5.4 per cent; 1986, 3.9 per cent; 1987, 3.2 per cent; 1988, 2.1 per cent; 1989, 4.0 per cent. The statistics show that, over the past three years, the rate of inflation averaged only a shade above 3 per cent. This was a marked improvement on price trends in preceding years. Slower domestic inflation, in terms of costs as well as prices, was a key factor in the economic recovery, and, in particular, in the real increase in consumer spending. Though there was a pick-up in the price trend through last year, this essentially related to external and temporary influences. All the indications are that the increase in the consumer price index has peaked, and that it will abate progressively through this year.

As indicated in Economic Background to the Budget, the outlook for 1990 is for a continuation of the low inflation pattern of the past few years. The average increase in consumer prices this year should be little more than 3 per cent, with the rate falling below 2½ per cent by end of the year.

This year's budget gave a high priority [1358] to bringing down inflation. The reductions in indirect taxation will directly lower the CPI by about ½ per cent on average. The reliefs of income tax will also help to underpin continued moderation in costs and to preserve living standards. Nevertheless, even with this action, restraint in all domestic incomes and charges is vital to preserving a low inflation environment. The Government are fully committed to the continued implementation of the strategy contained in the Programme for National Recovery which to date has been so successful in providing a framework for containing inflationary pressures and, through the resultant improvement in competitiveness, has brought about a substantial increase in sustainable employment.

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