The likelihood of the Irish Congress of Trade Unions seeking a pay review appears to be growing because of the limited options open to the Government in tackling inflation.

Official sources indicated yesterday that the most that can be expected from next Tuesday's Cabinet meeting is a maximum pricing order on alcoholic beverages, intensified price monitoring and accelerated delivery of the £250 million (€317 million) childcare package in the Programme for Prosperity and Fairness. There may also be some easing of restrictions on obtaining pub licences.

Public transport subsidies appear now to have been ruled out after CIE submitted figures which suggest a £50 million cash injection to reduce fares would only take 0.01 per cent off the Consumer Price Index. Measures to reduce VAT or excise duty on selected items are thought unlikely before the December budget.

A minimalist approach to inflation may well suit the Irish Business and Employers' Confederation. Its director general, Mr John Dunne, who met the Taoiseach yesterday morning, took a similar line to the Economic and Social Research Institute's quarterly bulletin in warning against short-term tax cuts that might fuel inflation in the longer term.

Mr Dunne told the Taoiseach he fully understood the pressures facing the trade union movement, but he said: "The best response is greater competition by introducing more licences, and so on."

There was a long discussion on the abolition of the groceries order and Mr Dunne expressed IBEC's "absolute opposition to such a measure because it is likely to have the opposite effect to that intended by the Government". He said the price of foodstuffs such as meat, which were not subject to the groceries order, had increased on average by 19 per cent over the past five years, compared to 15 per cent for controlled items.

However, Mr Dunne accepted there had been excessive profit-taking, especially in the personal services sector. He fully supported measures to "beef up the Competition Authority and the Office of the Director of Consumer Affairs". Speeding up the process for issuing work permits to immigrants, promoting consumer awareness and more incentives for employers to provide childcare facilities were also IBEC priorities.

Later, the general secretary of IMPACT, Mr Peter McLoone, said the Government and IBEC should not underestimate the risk inflation posed to the Programme for Prosperity and Fairness. "The unions will not be able to hold the line if the Government is not prepared to protect the value of pay increases negotiated under the deal.

"Unless concrete measures are taken, and taken quickly, it is only a matter of time before one group or another submits a fresh pay claim. Then it would be next to impossible to maintain support for the deal."

With inflation "way above the figure on which the deal was done, workers cannot again be asked to wait for the so-called medium term", he said.

The general secretary of the ICTU, Mr Peter Cassells, said: "The Government must honour its commitments in the PPF to reduce tax for PAYE workers in the December budget." The Government "must also proceed with the package of measures for slowing down the rate of inflation due to be published next week."

He added, "The lack of imagination and originality in the `advice' being offered by the ESRI economists involved with the Quarterly Review is very disappointing."

SIPTU president Mr Des Geraghty said that people on fixed incomes such as PAYE workers and pensioners had not been responsible for creating the current inflationary pressures. They should not be expected to bear the brunt of solving the problem and suffer once more in a "give back nothing society". Irish Farmers' Association president Mr Tom Parlon said that farmers' incomes were particularly vulnerable to inflation. He called for an urgent cut in the top VAT rate from 21 per cent to 17.5 per cent. This would bring us in line with UK rates and reduce inflation by 1.5 per cent.