Govt failing to control inflation, Dáil told

Lack of competition, international energy prices and interest rate hikes are driving up Ireland’s inflation, not the Government, the Dáil heard today.

The Taoiseach came under pressure from Labour leader Pat Rabbitte to explain rising consumer costs despite the abolition of the Groceries Order in 2006.

Mr Rabbitte pointed to a survey by Ibec which pointed to increases of as much as 20% in the cost of bread, breakfast cereals and fruit juices in coming months.

He added: “Gas up 23%; ESB up 12%, bus and rail fares up, toll charges up, bin charges up.”

The European Central Bank has promised another hike in interest rates next month, he added. He asked the Taoiseach if he was concerned that the Towards 2016 national pay deal only offers a 10% wage increase over 27 months.

He asked: “Can you explain why you told us, after the striking down of the Groceries Order, that food prices were going to fall?”

“I should have known when I heard Minister for Enterprise, Trade and Employment Micheal Martin say that prices in a shopping basket over a year would fall between €500 and €1,000 – I should have known that the opposite should have been the case.

“He’s one of these ministers – so long as his tie is straight and the script is available from the spin doctor – out he goes. Anything at all comes off the top of the head.”

Mr Rabbitte claimed that inflation could rise as high as 6% for February.

The Taoiseach accepted there has been an upward inflationary trend for the past few months and it could continue for another month.

He added that inflation for 2006 was just over 4.1% but that energy prices and interest rate increases made up as much as 2% of that level. “This is very favourable in international terms,” he said.

Lack of competition in some areas had also led to rising prices, he noted.

He said that cost of fresh meat, fish, vegetables, clothing and car insurance had declined in the past year and that grocery prices in the average shopping basket had remained low.

Mr Rabbitte said that a barrel of oil is now at its lowest price for 19 months.

“I know that you or none of the comedians beside you have had to go near a petrol forecourt in a very long time so you don’t have any idea of the situation confronting the average taxpayer and citizen,” the TD added.

Ireland was now the most expensive country in the Eurozone area, he continued.

However Mr Ahern replied: “There are areas where there is a lack of competition, and with the assistance of competition in those areas, we could get further decreases.”