The Government is "sleepwalking the country into recession" it has been claimed this evening after confirmation of the worst inflation figure in 18 months.
Labour Party leader, Mr Pat Rabbitte made the charge after Central Statistics Offices reported the Consumer Price Index (CPI) for December showed a 5 per cent rise. The figure is highest in the European Union, and more than twice the community's average.
Fine Gael is also warning that the situation is likely to get worse because increased public services charges have yet to feed through.
Consumer prices increased by 0.7 per cent in the month. According to the Central Statistics Office the average rate of annual inflation in 2002 was 4.6 per cent, compared with 4.9 per cent in 2001.
The most significant monthly price changes were increases in alcohol and tobacco (+5.6 per cent), and hotels, restaurants and bars (+0.8 per cent). Alcohol and tobacco rose as a result of increased excise duties announced in Budget 2002.
The most notable changes in the year were increases in education (+11.6 per cent), alcohol and tobacco (+10 per cent) and health (+7.7 per cent).
Mr Rabbitte says that added to job loss announcements totalling almost 600 earlier this week, the new inflation level - the first time it has touched 5 per cent since June, 2001 - underlining the extent to which the Irish economy is in difficulty.
December's 0.2 per cent rise in the annual inflation figure since the previous month was attributed mainly to measures imposed in the recent budget statement by Minister for Finance, Mr Charlie McCreevy.
Next month's Irish inflation figures could also be hit by government action, as the effects of a 1 per cent rise in the lower rate of VAT, which applies to services, has yet to be felt.
Mr Rabbitte claimed: "Government industrial and economic policies are not dealing with the emerging economic crisis with the stance on fiscal and public spending policy bound to make things worse."
Fine Gael finance spokesman, Mr Richard Bruton, said the government had chosen "the lazy way" to deal with the problems of public finances.
He added: "The government has come up with a thousand different ways to make the ordinary public pay extra - such as in health, education, on the roads, in the banks, in the utilities and in the shops.
"And the 5 per cent figure does not tell the whole story as increases in electricity charges, health insurance and local authority charges, among others, have not yet taken effect."
Mr Austin Hughes, chief economist at IIB Bank in Dublin, said inflation was likely to get worse before it gets better.
"The details of the numbers aren't as awful as the headline figures, but you're still likely to see inflation push towards a 5.8 per cent peak over the next few months as the rest of the budget increases and other public sector charges come into play," he said.
Mr Alan McQuaid chief economist at Dublin-based Bloxham Stockbrokers said he was not surprised with the figures following the December Budget but their may be more pain in store.
"Going forward, obviously with inflation at five percent at the end of the year and (budget) rises in VAT, electricity, gas, TV licences, and road tax still to come through, and uncertainty over oil prices, the outlook is not too good," he said.
"Whether inflation will hit six percent is hard to know but certainly it will be over five for most of the first half of the year and then hopefully fall back in line with the rest of Europe." he added.