Inflation jeopardises small business
sector
 By Niamh
Hennessy
An inflation crisis has hit Ireland and Britain — sending the costs
of consumer items soaring.
This could result in a drop in visitors to and from both countries as
well as mainland Europe as petrol costs and tobacco taxes rise.
The Irish Government’s Central Statistics Office reported that the
rate of inflation in Ireland hit 4.9 per cent in December, reaching a
four-year high and its highest level since March 2003.
In 2006 the average inflation rate was 4 per cent, compared with 2.5 per
cent in 2005, giving the rate its highest average since the figure of
4.6 per cent recorded in 2002.
Energy products were up 8.2 per cent, reflecting the surge in oil and
gas prices.
Gas prices were increased by 35 per cent late in the year and the cost
of electricity is set to rise by 12 per cent soon.
Overall housing, water, electricity, gas and other fuels recorded a 33
per cent surge in prices last year, while the hike of 50c on a pack of
20 cigarettes added to the surge in the latest figures.
Chief executive of the Irish Small and Medium Enterprise Organisation
Mark Fielding said: “Inflation is spiralling out of control and
if allowed to continue will do untold damage to the small business sector
in terms of investment and jobs.”
Meanwhile inflation in Britain rose to an annual rate of 3 per cent recently,
a 10-year high.
The rise from 2.7 per cent in November lent some clarity to the Bank of
England’s surprise interest rate increase two weeks ago.
Higher prices for fuel, furniture, household goods and recreation were
the main contributors to the increase said the British Office for National
Statistics.
Prime Minister Tony Blair insisted that falling oil prices would correct
the spiralling costs of goods and services — a factor that has added
to the burden of already high costs of living in Britain — and bring
inflation back to the target of 2 per cent this year.
Mr Blair said Britain still compared favourably to the US and the rest
of Europe.
He said: “The underlying position of the British economy, even with
the recent interest rate rise, is one of strong economic growth, historically
very low interest rates, inflation under control and employment and living
standards high.”
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