The Irish Congress of Trades Unions (Ictu) is to urge Taoiseach Bertie Ahern tomorrow to increase mortgage interest reliefs.
Ictu and the Irish Business and Employers' Confederation (Ibec) will meet Mr Ahern for talks at his invitation on the economy in Government Buildings tomorrow.
Mr Ahern will be accompanied by Minister for Finance Brian Cowen and Minister for Enterprise, Trade and Employment Micheál Martin.
Last night, Ictu general secretary David Begg said unions were "very concerned at the continuing high level of inflation" which threatened to remain over 5 per cent by the end of the year.
He said the Irish inflation rate was heavily influenced by mortgage rates. "If you cut mortgages out of it, inflation would fall to 2.7 per cent, so that shows the importance."
He said mortgage interest relief should be increased sharply, and homeowners should be able to claim it back at the higher rate of tax.
The Ictu delegation will be led by Mr Begg, while the Ibec team will be led by its director general Turlough O'Connor.
Mr Begg said the upward European Central Bank (ECB) interest rate trend was "set to continue into 2008". This would mean that pay rises agreed under the Towards 2016 social partnership would be exceeded by inflation.
The ECB was increasing interest rates to cut inflationary pressures in the euro zone. However, the move had the opposite effect in Ireland because of the high level of personal borrowings.
Mr Begg said Ictu had made it clear that it would wait until the middle of the year to see if predictions that inflation rates would fall were correct.
"Those forecasts were clearly wrong, and it is time to act. Workers cannot be passively expected to absorb these increased costs. The cost of the average mortgage has risen by €320 a month in less than two years and that is unsustainable."