At ISME we get our inspiration from the most wonderful of places. Today, Winnie the Pooh, everyone’s favourite bear, is 90 years old so we thought we might draw on some of Winnie’s wisdom to explain something about inflation in the Irish economy.
“It is more fun to talk with someone who doesn't use long, difficult words but rather short, easy words like "What about lunch?” - Winnie-the-Pooh
New figures just released by the CSO show that the country’s annual inflation rate in September was zero, a marginal increase on the August number which was just below zero. Consumer prices were actually down 0.4% in the month in September. Meanwhile, the HICP rate, that’s the measure used for EU comparative purposes, was also down 0.4% in the month, giving an annual inflation rate on this basis of -0.3%, as against 0.4% in the previous month.
For the Poohs reading this we’ll keep our words short and easy
There’s no inflation; so why are the government and State agencies giving wage settlements at 7% plus? These levels of wage claim settlements, paid for by the taxpayer, are the direct cause of wage inflation in the private sector where the true horror of Brexit is beginning to be felt. Do Ministers Noonan and O’Donohoe not understand these simple words? Productivity is the only way to pay for increased wages. No increase in wages should be allowed without some commitment to greater output.
“People say nothing is impossible, but I do nothing every day.” - Winnie-the-Pooh
According to independent commentators such as @MerrionCapital the view is that “Despite the booming Irish economy, inflationary pressures…are likely to remain fairly well contained in the immediate future. That said, the cost of services like insurance and education look set to continue to rise, and sharply. Indeed, motor car insurance was up 25.2% in the year in September, albeit down from the annual rises of 28.2% and 38.6% posted in August and July respectively, but still clearly indicating that it is not all plain sailing for consumers on the prices front.”
Winne’s ‘nothing’ seems to be the preferred option
But these are the very areas where government should govern. If our government ripped through the insurance and legal sectors, as they should, consumers (aka voters) would be thankful. However,
“If the person you are talking to doesn't appear to be listening, be patient. It may simply be that he has a small piece of fluff in his ear.” – Winnie the Pooh
At ISME we have said it again and again and again. Inflation is the enemy not just of business, but also of jobs. Where there are no jobs there’s a loss of human dignity. Surely small business owners, our members, can’t be the only people in the country who are actually concerned not just about keeping their own business viable but for the wider society to keep Ireland working. A working Ireland is in every citizen’s interest. However, time after time, it seems when it comes to home-grown inflation the government has one big piece of fluff wedged in each of its economics ears?