ISME, the Independent Business Organisation, while welcoming the reduction in the inflation rate from 5.0 per cent to 4.3 per cent, has warned that the threat of inflation to Irish business was still to the fore, with the continuing high levels providing little comfort or respite to those in the non-sheltered sector.

The association also warned against complacency, outlining that the rate of inflation is only back to the same rate as at the start of the year and still ahead of the EU average.

ISME Chief Executive Mark Fielding outlined, "We have been down this road before only for the rate of inflation to 'bounce back' to previous levels. The cost environment continues to dominate the economic landscape and nowhere is this more apparent than in the level of job losses recorded since the start of the year, up 27 per cent on the corresponding period for last year. There is no doubt that the high level of Irish inflation over the last number of months is damaging competitiveness and feeding in to the labour market, leading to increased numbers of redundancies."

Fielding expressed concern that, with national wage talks already underway, the Unions will continue to use inflation as the stick to beat employers when it comes to wage demands.

"The Unions need to realise that employers are also suffering due to the high cost environment, which is undermining competitiveness and in turn putting the existence of many businesses and the livelihoods of their employees under threat. Any further increase in business costs, particularly the wage element, will exacerbate an already serious situation."

"With Irish inflation remaining at the higher end in the EU, it is imperative that the new Cabinet, under the leadership of the Taoiseach Brian Cowen, puts inflation at the top of their agenda, to ensure not only the survival of many small businesses but also the protection of the jobs within those companies. Part of this policy needs to include addressing the cost of the public sector, a point highlighted recently by the OECD," Fielding concluded.

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