The Taoiseach has promised action against inflation within a week, conceding that prices will rise even faster over the next six months as new figures show Irish inflation at three times the EU average and by far the highest in the Union.
At the European Council in Portugal last night, Mr Ahern promised urgent action but would not confirm that the Government would intervene to fix the price of alcohol and other products.
While condemning "excessive profit-taking" in the drinks and other industries, he also warned that price-fixing didn't always work.
While confirming he believed inflation would rise further, the Taoiseach said economists predicted it would begin to ease again within six months.
However, a spokesman for the EU's Economic Affairs Commissioner, Mr Pedro Solbes, warned that Ireland must take fiscal measures to avoid overheating.
This is generally seen as a call for a postponement of some of the Government's tax-cutting plans.
Mr Ahern's pledge of quick decisions came amid growing trade union pressure and fears that rising prices would cause workers in many sectors to seek compensating pay rises outside the terms of the Programme for Prosperity and Fairness.
The 5.1 per cent annualised figure for Ireland closely mirrors the 5.2 per cent figure released last week by the Central Statistics Office.
Ireland's rate contrasts with a 1.7 per cent EU average and a 1.9 per cent figure within the euro zone. The next highest EU inflation was in Spain, at 3.2 per cent, with the lowest in the UK (0.5 per cent), followed by Sweden (1.3 per cent).
Mr Ahern told reporters at the European Council that price controls were being examined "very seriously", but he said the introduction of competition into sectors where prices were high was "ultimately the way to resolve the issue".
Price control was "difficult enough to enforce: it has worked some times, it hasn't worked other times."
He said the new Intoxicating Liquor Bill would allow a certain number of rural pub licences to move into the city market, but conceded more action was needed. "We must generate as much heat as we can in areas were we need competition or where there is overpricing," he said.
Mr Ahern did not specify which other areas were experiencing overpricing, but the Government is believed to be examining some supermarket prices as well as the drinks industry.
Jane Suiter, Economics Correspondent, writes:
The Minister for Finance will have no option but to revise the forecast to around 5 per cent at the publication of the annual Economic Review and Outlook in July, in a move which is likely to provoke further trade union concern.
The Government is continuing to look at ways of reducing inflation but with the Taoiseach at the EU Summit, no decision will be taken at today's Cabinet meeting, although the matter may be discussed.
A spokeswoman for Mr McCreevy said yesterday that all issues in relation to direct and indirect taxation would be looked at in the context of the next Budget.
On proposed price controls, she added that the "Taoiseach and Minister for Finance have signalled their growing concern about the significant unjustified increases in other areas and have stated they will take this into account when looking at measures to curb inflation".