The general secretary of the Irish Congress of Trade Unions has said the rise in the inflation rate this year can no longer be passed off as a spike.
David Begg's comments came after new figures confirmed that inflation has averaged 5% for the past six months. Mr Begg said the cost of living was likely to exceed the pay terms of the social partnership agreement, and that this was 'a very serious problem indeed'.
He called for increased mortgage tax relief and a cut in the 21% VAT rate, adding that if ways could not be found to ease price pressure, ICTU would call for negotiations on the next national pay deal to be brought forward. The general secretary of SIPTU, Jack O'Connor, had made a similar call earlier.
But IBEC's Turlough O'Connor said all social partners knew there would be a spike in inflation in the early part of this year. He said most commentators believed that inflation would be more modest by the end of the year. Mr O'Connor also told RTE radio people had benefited from tax changes in the last Budget and we could not get into a 'wage-price spiral'.
The Taoiseach said it was clear that Ireland was entering a period of challenging economic conditions and it was important to focus on restoring and renewing competitiveness. He said he and the Minister for Finance would be seeking an early meeting with IBEC and ICTU after the formation of a new government to discuss how to tackle inflation.
The Central Statistics Office data show that the annual rate of inflation eased slightly to 5% in May from 5.1% in April despite further increases in rents and average mortgage repayments during the month. It also showed that average monthly mortgage repayments have risen by 46.5% in the past year while rents have risen by 11.1%.
The data also show that housing, water, electricity, gas and other fuels have been responsible for 65% of annual inflation.
The chief executive of small business group ISME, Mark Fielding, said the despite the drop, unpredictability about the level of inflation over the next number of months was creating 'a huge level of uncertainty' within the business community. He said this was making it difficult to plan ahead and was undermining confidence.
Today's inflation data show that overall public utility charges have increased by an average of 9.3% in the past year. They also show that services inflation is running at 9.1% compared with an inflation rate of 0.3% for goods.
