Former taoiseach Garret FitzGerald has blamed Fianna Fáil's "mishandling" of budgets at the turn of the century for the rise in consumer prices.
Dr FitzGerald, who headed two Fine Gael-led governments during the 1980s, this morning laid the blame for the high cost of goods and services at the feet of former finance minister and current EU Commissioner Charlie McCreevy.
"We moved within three or four years from being the lowest-cost country in Western Europe to being the highest-cost country," he told TV3's Ireland AMprogramme.
"Prices here are now very much higher than almost any other country. It's quite astonishing when you look at the international comparisons and see the difference."
He said this has resulted in a serious problem for the Government and economists.
"The underlying situation is that we are not competitive in the way we were. We lost that because of the mishandling of the budgets at the turn of the Millennium by McCreevy. So we really have a problem here to try to get this right."
Dr FitzGerald warned that reaching a National Wage Agreement between employers and unions in the social partnership talks, which begin today, would be very difficult.
The Irish Congress of Trade Unions is set to argue that workers must be compensated for rising prices, but employers will stress that profits are being eroded by rising international oil prices and other factors.
Mr McCreevy, who left the Cabinet as finance minister in 2004 to became the EU's Internal Market Commissioner, delivered seven budgets after coming to office in 1997.