Dáil Éireann Debate, Thursday - 23 November 2023
100. Deputy Richard Boyd Barrett asked the Minister for Finance if he will explain the basis of his projection for inflation in 2024 of 2.9% when the annual inflation rate in September was 6.4%, and has been increasing recently; and if he will make a statement on the matter. [46961/23]
View answerInflation reached multi decades high rates last year, peaking as high as 9.6 per cent in July 2022. This increase in inflation was initially driven by a surge in energy prices on foot of the fallout from Russia’s invasion of Ukraine. However, inflation subsequently became increasingly broad based as price pressures spread throughout the economy.
I am pleased to report that we now appear to have turned a corner on inflation. The most recent data suggests that annual inflation for October as measured by the Harmonised Index of Consumer Prices (HICP) was 3.6 per cent, from 5 per cent in September, and down by almost 6 percentage points from this time last year.
The Government is fully aware that the inflationary challenges have not yet abated. Core inflation (which excludes energy and unprocessed food) remains persistently high, with the inflation rate for October at 4.6 per cent. This reflects widespread capacity constraints in the Irish economy, notably in housing and labour markets.
As set out in Budget 2024, my Department forecasts inflation to moderate significantly next year, with the HICP is projected to average 2.9 per cent over the course of the year, hitting 2½ per cent by the end of the year. This reflects the decline in wholesale energy prices feeding into retail prices lowering the price of energy for Irish households. More broadly, the slowing pace of growth in the economy, should allow for an easing in supply and demand imbalances. Of course, while the rate of price growth is forecast to slow, price levels will nonetheless remain elevated. That said, the pace of wage growth, including in real terms, is projected to pick-up next year.
Throughout this period of high inflation, the Government has been at the forefront in supporting the most vulnerable. By responding swiftly and decisively to the cost of living challenges, the Government has helped to mitigate the impact of inflationary pressures on both businesses and households. The temporary and targeted nature of these measures have been designed to avoid adding to the inflationary burden whilst providing support to those most in need.
