Public opinion surveys in many countries have highlighted the rate of inflation as a huge concern and governments are pressured to respond.

In Ireland, the Government, believing that there are no grounds for worry about the fiscal position, has reduced indirect taxes on fuel, ensuring that the budget surplus will fall.

The UK government has deferred tax increases that were due to commence soon and had considered, then abandoned, a plan to seek a voluntary price freeze from supermarkets.

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The widespread public concern about inflation is a puzzle for economists and statisticians. The price level is measured carefully and frequently by national statistical offices and people familiar with their efforts do not doubt their competence.

The public does – people do not believe that inflation has risen very little if at all in recent years and they cite how much they pay for routine items that are purchased regularly.

Everyone knows that petrol and diesel now cost more than a year ago – every filling station has a large sign outside giving the price and the arrival of €2 per litre was front-page news.

The public blames retailers, including supermarkets, and there is a widespread suspicion that they are engaged in price-gouging, colluding to enhance their margins at customer expense.

The evidence is that the public are factually incorrect – the official estimates of consumer price inflation ticked up only a little in recent quarters.

For the Eurozone as a whole the long-term target of 2% inflation has not been abandoned and the European Central Bank expects to be back on track once the Middle East war has been resolved.

In both Ireland and the United Kingdom, the public agencies responsible for competition policy have reviewed the evidence of price-gouging in the retail grocery trade. In both cases they have concluded that there is adequate competition at present and have not recommended government action.

The evidence is that the public are factually incorrect – the official estimates of consumer price inflation ticked up only a little in recent quarters

In the UK, the Competition and Markets Authority imposed large fines on the four main supermarket groups – Tesco, Sainsbury’s, Asda and Morrisons – for jointly fixing the price of some staples in 2007, including milk and cheese.

There has been no repetition and the UK Treasury advised the government to back off for lack of evidence after loud threats in recent weeks. With the rise of discount retailers Lidl and Aldi, competition in grocery has intensified and Aldi has just replaced Morrisons in the UK’s ‘big four’ when ranked by turnover.

The situation in the Republic is essentially the same. There are five big national chains – Tesco, Dunnes, Supervalu along with Lidl and Aldi – and investigations by the Competition and Consumer Protection Commission have failed to find any evidence of collusion.

Almost every large town has branches of all five. So has every suburb of Dublin and the evidence of collusive price-gouging of customers or farmer suppliers, both of which would be illegal, is simply missing according to the CCPC.

The public conviction that they are being ripped off by grocers and filling stations has been reinforced by opposition politicians who demand Government intervention, invariably measures that would hurt the public finances with more spending or more tax reductions.

When the Government does what they ask, the measures are dismissed as inadequate.

Policy is being modified in response to belief that Ireland has a serious inflation crisis, regularly described as ‘unprecedented’, in the absence of any evidence of aggregate price increases from the Central Statistics Office or of retailer collusion from the agency which polices competition.

Some prices are more salient than others. People buy cartons of milk every day and litres of auto fuel every week. The Consumer Price Index reveals that, while some salient items have indeed risen recently, infrequent purchases, including big-ticket items, have actually been falling in price over recent decades.

An example is flat-screen TV receivers, now available for a fraction of the price compared to when they emerged as a luxury item in the 1990s.

Consumer durables generally are now cheaper when prices are adjusted for quality improvements, with cars the leading example.

You pay less for a current model (with better aerodynamics, safer brakes, better fuel consumption) as for a brand-new offering of the 1990 version of the same car.

National statistical offices try to adjust for quality changes and like-for-like prices are actually falling in many cases. With clothing, imports from outside Europe have been a boon for consumers in price terms, reflected accurately in the published Consumer Price Index.

Constant complaints in Dáil debates about the crushing increase in food prices also miss the point.

Food now accounts for about 14% of consumer spending, versus 22% in 1990 and even higher shares in earlier decades. The Government cannot affect the world price of auto fuel, it can only run riskier budgets, subsidising Irish consumers with Irish taxpayers’ money.