By Andrew Bushe
DUBLIN – Fueled by dearer food, cigarettes, clothing and package holiday prices, the inflation rate rose by 0.5 percent in April to bring it to 2.5 percent over the past 12 months, according to figures from the Central Statistics Office.
If this level of monthly increase was to continue, inflation would be approaching an “alarming” 6 percent by the end of the year, according to Fine Gael Finance spokesman Michael Noonan.
“Rising inflation is very bad news especially now when the nominal rate is approaching the annual increase available to workers under Partnership 2000.”
Noonan said that as prices rose people got poorer and there were already serious difficulties with pay claims from the Gardai and craft
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“This is going to fuel further pay demands and there is danger now for the first time in over four years that a lot of the economic progress in the economy will be reversed through rising inflation.”
He accused Finance Minister Charlie McCreevy of mishandling the economy with an over-expansionary budget, moving belatedly to try and control house prices and making no attempt to negotiate a fair settlement with the Garda and craft workers.
“He talks a very good game but he doesn’t play as good a game as he talks,” Noonan said.
Minister McCreevy said the previous government had “effectively laid down in front of pressure” on pay deals for teachers and nurses.
He said the Partnership 2000 wage agreement was based on an average inflation rate of 2.1 percent during the period. In the first
year of the agreement the rate had been 1.5 percent.
The Minister said inflation was worrying. “We must keep inflation under control because in the new context of the single currency the strain within Irish economy must be taken by ourselves. We cannot go back down the road of high inflation, high wage increases and
consequently higher debt and higher taxes.
“That was the spiral we were into in the 1970s and 1980s and was broken successfully. That is why I cannot agree to any group, no matter how deserving their cause, putting that whole scenario at risk.”