Aindrias Moynihan
Question:157. Deputy Aindrias Moynihan asked the Minister for Finance the measures he sees as appropriate to address the cost of living with rising inflation; and if he will make a statement on the matter. [62315/21]
View answerThursday, 16 December 2021
Questions (157)
Written answers
The annual rate of consumer price (HICP) inflation rose to 5.4 per cent in November – the highest rate in over two decades. Inflationary pressures are not unique to Ireland however, with multi-decade high inflation rates of 6.8 and 4.9 per cent recorded in the US and euro area in November. However, this comes after years of inflation of around 1 per cent, with the price level in Ireland still well below the level it would have been had the inflation rate been in line with the ECB price stability target of 2 per cent over the last two decades.
The recent rise in inflation is partly explained by global factors, which are expected to ease over time, including oil price ‘base effects’, global supply chain disruptions and the imbalance between supply and demand that has emerged following re-opening. More recently, rising wholesale energy prices have added to inflationary pressures, with energy inflation of 28 per cent recorded in November. However, futures markets point to an easing in energy inflation next year.
At the time of the Budget, my Department forecast headline inflation of 2¼ per cent for this year and next, however, the recent rise in wholesale energy prices means there is likely to be upside to the projection for next year. Nevertheless, inflation is expected to ease over the course of next year as these factors fade, demand stabilises and supply catches up. However, the possibility of persistently higher inflation cannot be ruled out.
The Government is however, very conscious of the impact of current inflationary pressures and introduced a range of measures in Budget 2022 to protect households against increases in the cost of living. These include a personal income tax package worth €520m and a social welfare package of over €550m. The fuel allowance was increased by €5 per week to compensate lower-income households for higher energy costs as a result of the increase in the carbon tax. There were also increases in the allocation of Early Learning Care and School-Age Childcare to ensure childcare prices do not rise. Nonetheless, my Department will continue to monitor inflationary developments closely and respond as appropriate.
Question No. 158 answered with Question No. 143.
Question No. 159 answered with Question No. 113.