ISME welcomes reduction in inflation

Wednesday, 13th February 2008

ISME, the Independent Business Organisation, welcomed the reduction in Inflation from 4.7% to 4.3% as a step in the right direction, but added that more needed to be done on the domestic front in order to bring the figure down to the stated aim of 2%.

Commenting, ISME Chief Executive Mark Fielding outlined, "While the trend in inflation is heading in the right direction, it is imperative that domestic costs are kept under control to prevent further inflationary pressures over the next number of months."

"It is no coincidence that the most sheltered part of the economy, with very little competition, is a significant contributor to the overall inflation rate. For instance Education (+6%) and Health (+ 5.2%) were among the highest increases over the last 12 months. Unless the cost environment in these areas is adequately tackled, through reforms in the public sector and increased competition in the sheltered sectors of the economy, the consistent underlying threat to Irish inflation will remain for the foreseeable future"

"Another worrying trend is the exceptional increase in goods inflation, which now stands at 3.3% in comparison to 0.6% this time last year, a six fold increase. This confirms that manufacturers can no longer sustain input cost increases and are now passing these increases for services and raw materials onto the end customer".

With talks on a new wage agreement due to commence over the next number of weeks, it is essential that steps are taken, including controlling state sponsored costs, to ensure inflation continues its downwards trend, which will help to alleviate excessive wage demands. "This point cannot be overemphasised," concluded Fielding.