ICTU concerned as inflation risesThursday 10 April 2008 23.30
The Irish Congress of Trade Unions has expressed serious concern at new figures which show that the annual rate of inflation increased to 5% in March.
ICTU has said the rising cost of living will have serious implications for pay talks.
The warning comes as the latest consumer price index from the Central Statistics Office reveal the annual rate of inflation has increased to 5% during March from 4.8% during February.
Higher prices for transportation fuel as well as increases in air fares, mortgage repayments, and home heating oil were the main factors behind the increase.
RTÉ's Economics Editor George Lee says today's inflation figure will come as quite a shock to the Government and to the social partners, who are due to sit down shortly to iron out a new national pay deal.
The economic adviser to ICTU, Paul Sweeney, said unions would have to take account of the rise during forthcoming talks on the next national wage agreement.
Groups representing small businesses say inflation now presents a significant challenge and want the Government to take a tough line on any new pay deal.
Two months ago Ireland's inflation rate was down to 4.3% and most forecasters predicted it would ease considerably further throughout the year.
What has happened since then is that food and energy prices have risen globally and a significant knock on effect on consumer prices has been unavoidable.
Today's figures show that overall the cost of housing electricity and other fuels has risen by 12.3% in a year, while the overall cost of food and non-alcoholic beverages is up by 9.3%.
However, behind these overall figures there are some very chunky individual price increases.
For instance the cost of bread is up 20% in a year, flour is up 42%, milk is up 31%, mortgage repayments are up 22%, while petrol and diesel are up 12% and 17% respectively.
George Lee says the big issue for the social partners is how to react. Workers will feel justified in seeking pay increases to compensate for these price rises, but employers and the Government will be reluctant to allow such an outcome as it would in a second round of inflation in the economy.
The European Central Bank has warned strongly about such second round inflation, and said it would raise interest rates in Europe if higher inflation results in higher wage increases.