Dáil Éireann Debate, Tuesday - 26 July 2022
324. Deputy Niamh Smyth asked the Minister for Finance if he will review the concerns of an employer (details supplied); the steps that his Department is taking to consider the matter ahead of Budget 2023; and if he will make a statement on the matter. [39742/22]
View answerConsumer price (HICP) inflation picked up sharply over the course of last year and rose to a multi-decade high of 9.6 per cent in June. Almost every advanced economy in the world is in the same position, with euro area inflation reaching a record 8.6 per cent in June.
The key driver of the elevated level of inflation at present is the sharp rise in wholesale energy, food and other commodity prices since the onset of the war in Ukraine. As highlighted in the correspondence, pass-through price effects from higher energy prices are increasingly being felt in other sectors including food (via higher energy inputs). Indeed, the recent rise in non-energy or ‘core’ inflation, which stood at 5.6 per cent in June, suggests inflationary pressures are becoming increasingly broad-based.
The Government recognises the impact this has had on households and businesses across the country, particularly SMEs, and has taken significant action. Some €2.4 billion in cost of living measures have been announced since last October. Looking ahead, the Government will continue to address these challenges. As set out in the Summer Economic Statement, Budget 2023 will be a ‘Cost of Living Budget’ and will build on the fiscal supports the Government has already provided to cushion the impact of rising prices.
However, we must be cognisant that resources are limited and while government policy will absorb some of the price shock, we cannot cushion households and businesses from the entire impact. The Government has to balance the appropriate response to the increased cost of living in Ireland with the unprecedented level of global economic uncertainty and macroeconomic risk. Furthermore, in calibrating how we respond to the current challenges, it is important that we strike the right balance and ensure that policy doesn’t inadvertently add further inflationary pressures into the system.
Finally, it is worth pointing out that monetary policy is the first line of defence against inflation. In this context, the European Central Bank raised interest rates last week for the first time in more than a decade.
