Tuesday, 12 November 2002
Dáil Eireann Debate
89. Mr. Penrose asked the Minister for Finance the projected level of inflation for 2002 based on the latest information available to his Department; the way in which this compares with the projected EU average and the figure forecast in his budget speech; and if he will make a statement on the matter. [21294/02]
Minister for Finance (Mr. McCreevy): On budget day, inflation as measured by annual changes in the consumer price index, CPI, was projected to average 4.2% this year. My Department's most recently published forecast was that contained in Economic Review and Outlook, published in August, where inflation was projected to average 4.5% this year. The upward revision partly reflected the impact of higher oil prices this year.
In terms of EU comparisons, the appropriate measure of inflation is the harmonised index of consumer prices, HICP. For 2002 as a whole, HICP inflation in Ireland was forecast at the time of the last budget to be 4.0% and this was revised to 4.75% in the Economic Review and Outlook. The most recent international forecasts for inflation in the EU are those of the IMF, published in September, and they estimate that HICP inflation in both the EU and the euro area will be 2.1% this year.
Irish inflation is higher than that in the rest of the EU partly as a result of domestic cost pressures. It is important that these cost pressures are not allowed to lead to deteriorating competitiveness which would result in higher unemployment. This is the reason wage moderation, and cost moderation more widely, are so important.
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