Possibility of deflation a concern

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ISME warns that recent "negative inflation" is not a sign that costs are coming under control

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8 March 2009 | 0

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Chief executive of the Irish Small and Medium Enterprise association (ISME), Mark Fielding has called on the government not to use the recently reported “negative inflation” in an attempt to suggest that all costs are currently under control. Recent CSO figures revealed that inflation has fallen a further 1.2%, from 1.1% to -0.1%.

Fielding said that while a reduction in inflation is welcome, the development also signals that deflation becoming “embedded in the system” is a real concern, and that it would have “long-term negative impacts on the economy.”

“The current level of negative inflation should not be used as a barometer to highlight that all costs are being kept under control,” commented Fielding. “The small business sector still has to contend with cost increases in labour, energy, local charges, waste and other production costs, well in excess of official figures”.

ISME warned the government it must now turn its attention to addressing cost competitiveness, “which is absolutely essential for the survival of business.”

“To date nothing has been done to address this serious issue and jobs are being lost at record levels. Unless we can bring our business costs into line with our competitors we will continue to haemorrhage jobs,” Fielding outlined.

 

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