Economic downturn - Full attention is required

The annual rate of inflation increased to 4.7%, according to figures published yesterday by the Central Statistics Office. This was up on the 4.3% last month.

Nobody is likely to be surprised in view of recent increases in food and fuel prices. Diesel costs have gone up by 23%, which has added to the cost of transportation. The increase in the Consumer Price Index doubled to 0.8% in May from 0.4% in April. The cost of food has increased by 8% during the past 12 months.

Retail sales figures have dropped very sharply since last October. The latest figures show a fall of 3.2%, which is the largest drop for five years. As a result government tax receipts are well down. The intake from Value Added Tax is down by 8% on what had been anticipated.

The retail, manufacturing and construction sectors are all clearly in contraction, this month has seen the sharpest increase ever in unemployment. The jobless figure has gone back to more than 200,000.

These trends do not augur well for the current pay talks. With the referendum and the other recent political distractions now out of the way, the Government must devote its full attention to the deteriorating economic situation.