SFA: Policy changes needed to ensure inflation stays low

The Director of the Small Firms Association, Avine McNally, has said: "The July inflation figures show that Ireland is not experiencing a broadly based price deflation as the key fall in costs are occurring in a narrow range of goods".

She said that, while these falls are positive for consumers they are not helping small businesses.

Ms McNally said: "The impact of administered prices is a critical issue for business. The most worrying aspect is that, for the main part, inflation is being driven by increases in public utility costs, such as education (9.2% increase), housing, water, electricity, gas (5.5% increase) and transport (2.7% increase), and these costs are daily input costs for businesses."

Ms McNally added that any price decreases that Ireland has experienced are largely a response to the Irish and international recession i.e. reduction in interest rates; reduced demand, rather than a specific response to any structural or policy changes made within the Irish economy.

She said: "Structural and policy changes are necessary to ensure prices remain low and do not increase when economic growth returns.

"Small Irish businesses have taken harsh steps to regain cost-competitiveness, but many costs are either rigid or are regulated by the State and have not fallen. When these costs are passed on to the rest of the economy, competitiveness and jobs are lost. Government needs to urgently tackle the business competitiveness issues that it directly impacts on."