Dáil Éireann Debate, Tuesday - 21 May 2024
102. Deputy Joe Flaherty asked the Minister for Finance if he expects that with inflation now moderating, the pressures many consumers have faced will likely ease across the year; and if he will make a statement on the matter. [22683/24]
View answerInflation reached multi-decade highs in 2022, averaging 8.1 per cent across the year with a peak of 9.6 per cent in June 2022 (as measured by the HICP). Whilst the initial driver of this inflationary pressure was a surge in global energy prices, it subsequently became increasingly broad-based as price pressures spread throughout the economy. This was extremely challenging for households who saw their purchasing power significantly eroded.
Since then, enormous progress has been made in reducing inflation with headline HICP inflation of just 1.6 per cent in April.
Key to this moderation has been the partial reversal of energy prices from extremely high levels. Consumer energy prices in April are estimated to have decreased by 6.3 per cent compared to April last year. This decline captures the fall in wholesale energy prices being passed through to retail gas and electricity bills. I expect further cuts to take place throughout this year as this process continues.
However, I am conscious that many households are still facing significant cost of living pressures, with pockets of inflationary pressure still remaining. This is particularly the case for domestic sectors, especially certain services prices. In part, this is due to capacity constraints in the economy. The labour market is essentially at full-employment and supply-demand imbalances are evident in a number sectors, including housing a key policy priority area for the Government.
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 the measures taken by Government have been designed to avoid adding to the inflationary burden whilst providing support to those most in need.
My Department forecasts an inflation rate of just over 2 per cent for this year as a whole. Looking forward, I expect the moderation in inflation to help ease the pressures facing consumers. This should improve households’ purchasing power and support increased consumer spending over the year.
