February 16, 2011
By Staff Reporter
By Andrew Bushe
DUBLIN — An inflation-busting package introduced by the Irish government has received a lukewarm reception from trade unions and consumer groups, who regard it as just a first step in protecting living standards after consumer price increases soared to the highest in the euro-zone.
Inflation rate reached 5.2 percent in the year to May, the highest for 15 years and the government have been accused of complacency.
In the booming Celtic Tiger economy, inflation has been increasing steadily since it bottomed out at 1.2 percent in July 1999.
The government said inflation will increase further in coming months but will fall back "significantly" by the end of the year.
The new package includes temporary controls on a range of alcoholic drink prices, new competition measures, extra cash for child care and a freeze on public-sector charges and levies for the rest of the year.
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Trade union bosses have been complaining that the first 5.5 percent of the new national wages deal had been eaten away by inflation. But the government said in a statement said the combined pay increase and budget tax cuts announced last December will give increases of 9-14 percent this year.
"This is well in excess of even the most pessimistic view of average inflation for the year," the government statement said.
The country’s director of consumer affairs has been ordered to initiate a "vigorous" program of price monitoring.
A further £40 million is to be allocated to the provision of nurseries and other child care facilities.
Eight ministers are to hold detailed consultations on prices over the next two weeks with representatives of the main sectors of the economy.
Groups like builders, retailers, lawyers, doctors, bankers and brokers will be told of the "need for a sense of social responsibility and restraint" with fees and profit margins.
The statement attacked "irresponsible behavior by retailers seeking to exploit the economic boom."
Consumer Affairs Minister Tom Kitt said he is "particularly concerned about reports of unwarranted price increases being imposed by unscrupulous retailers. We need retailers to behave in a responsible fashion and consumers to be vigilant."
The Irish Congress of Trade Unions said the package was a first installment and more needs to be done.
Des Geraghty, president of the largest union, SIPTU, described the government measures as "very small."
He said stronger and more extensive measures are needed if the unions are not to seek a renegotiation of the 33-month Program for Prosperity and Fairness.
"It is a sign the government recognizes the problem but it is not enough to bring down the rate of inflation," he said.