Inflation drops a further 0.6%

Inflation maintained a downward trend in April, as weak external economic conditions worked to mask persistent domestic price pressures. Figures released by the Central Statistics Office (CSO) show that inflation dropped from 4.9 per cent to 4.3 per cent over the month.

The fall, which was the largest monthly decline recorded since the start of 2001, was driven largely by events abroad, including falling oil prices, lower euro-zone interest rates and the continued weakness of the dollar.

Despite the fall, Irish inflation remains more than twice as high as the euro-zone average, which is estimated to have fallen to 2.1 per cent in April. The latest data for the Republic show that while consumers benefited from lower mortgage repayments and a monthly easing in petrol prices last month, they faced acute price pressures in other areas, many of which are linked directly to Government policy.

The CSO has found that education costs have risen by 10.4 per cent over the past year, while alcohol, drink and tobacco prices have jumped by 10 per cent and health charges by 8.4 per cent.

Within this, hospital services were 14.8 per cent more expensive. The cost of electricity was 6.6 per cent higher, as billing increases introduced at the start of the year continue to be implemented on a phased basis.

Fine Gael finance spokesman, Mr Richard Bruton, said the April numbers proved that inflation was "a beast of the Government's own making", claiming that official policy moves had contributed to more than 60 per cent of last month's price increases.

Business lobby IBEC, which recently attributed more than a third of Irish inflation to increased Government charges, taxes and duties, yesterday urged action in areas where inflation is under domestic control.

Speaking on RTÉ radio yesterday before the publication of the data yesterday morning, the Tánaiste, Ms Harney, said the Government's contribution to inflation was "very small indeed", and insisted that "wider issues" needed to be addressed if price growth was to ease. She restated the Government's plan to use competition policy to drive down inflation, particularly in sectors of the economy sheltered from international business.

IIB economist Mr Austin Hughes said that while a drift towards lower inflation was now becoming established, the scale of April's decline was unlikely to be repeated over coming months.