Charlie feels inflation's pinch

Charlie McCreevy has spent a lot of time this week talking up the economy and his performance to date. He was particularly bullish in an address to certified public accountants about the Government's approach to improving the lot of the low paid.

Citing a report to this week's Ecofin conference, he said the tax burden on the low paid in Ireland was as low as anywhere in the developed world and the situation had been improving faster here than almost anywhere else in recent years.

But one set of figures was stark in the extreme for the Minister this week - the inflation data issued yesterday. A sharp rise in the annual rate from 6.2 per cent to 6.8 per cent was the last thing Mr McCreevy would have wished for as he faced into the Budget next month.

He is caught in a vice between the pundits - especially those abroad - exhorting him not to cut taxes in the Budget and the social partners demanding action to offset the effective fall in the value of pay rises agreed for workers by them in the Programme for Prosperity and Fairness. These were worked out on the basis of a far lower rate of inflation.

The headline inflation rate is running at a rate not seen since summer 1984 but the Minister is still toying with an almost embarrassing budget surplus.

If Mr McCreevy's past is anything to go by, it will be a case of "The Minister's not for turning" from his policy of tax cuts . . . after all, there is still the small matter of an election to be won.