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Inflation Rate

Dáil Éireann Debate, Tuesday - 22 February 2022

Tuesday, 22 February 2022

Questions (278, 279, 283, 284)

Bernard Durkan

Question:

278. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which Ireland along with the rest of the European Union can formulate a plan to counter the inflationary tendencies currently in train; and if he will make a statement on the matter. [10033/22]

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Bernard Durkan

Question:

279. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he and his colleagues in the Eurozone can combat seriously inflation affecting Ireland and other European countries; and if he will make a statement on the matter. [10034/22]

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Bernard Durkan

Question:

283. Deputy Bernard J. Durkan asked the Minister for Finance if current inflation rates across Europe and including Ireland can be combatted by way of a Europe-wide response; and if he will make a statement on the matter. [10038/22]

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Bernard Durkan

Question:

284. Deputy Bernard J. Durkan asked the Minister for Finance if he and his colleagues across Europe are aware of the danger of current inflationary trends which could have a dramatic and negative effect on all economies; if a formula has been examined with a view to combatting the issue; and if he will make a statement on the matter. [10039/22]

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Written answers

I propose to take Questions Nos. 278, 279, 283 and 284 together.

At both the ECOFIN and Eurogroup meetings, my fellow Ministers and I work alongside the European Commission and the European Central Bank to take stock of the latest economic situation, including inflation developments throughout the EU.

The latest Eurostat estimates point to euro area annual inflation of 5.1 per cent in January. This was largely driven by energy inflation, which increased by an estimated 29 per cent. Pandemic-related effects, such as the impact of temporary VAT reductions, and technical factors, such as measurement issues, added further volatility. Core inflation – which strips out energy and non-processed food inflation – was 2.5 per cent in January.

HICP inflation moderated slightly from 5.7 per cent to 5.0 per cent in Ireland in the same period.

The latest figures point to inflation, including energy prices, remaining high over the near-term, before gradually easing later this year. The ECB projects inflation to average 3.2 per cent this year but to decline to rates of 1.8 per cent in both 2023 and 2024. Both the Commission and the ECB are confident that elevated inflation is largely linked to temporary factors, including supply-side constraints and the recovery in demand as our economies reopen.

As the Deputy is aware, the ECB is an independent institution with a mandate to maintain price stability, defined as around 2 per cent over the medium-term. The ECB currently expects inflation to fall slightly below 2 per cent by end-2022.

That said, energy prices can entail wide-ranging consequences for inflation and raise costs for businesses and families. In recognition of these potential social impacts, many Member States have introduced targeted measures to protect vulnerable households from energy poverty.

Ireland is one of these Member States. In framing Budget 2022, I was conscious of these cost of living pressures and announced a range of measures including targeted social welfare initiatives. Last week, Minister McGrath and I announced a suite of further supports to aid households and to target the main underlying problem – higher energy prices. This is in addition to the electricity credit for households announced late last year.

In addition, at an EU level, the Commission has issued a Communication on Tackling Rising Energy Prices, and the matter was discussed at various Council configurations. The Communication emphasises the broad nature of the impact and policy response.

In short, my fellow Finance Ministers and I all agree that this is an important issue and that we need to continue closely monitoring inflation and energy price developments and the potential implications for our economies.

Question No. 279 answered with Question No. 278.
Question No. 280 answered with Question No. 276.
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