Alan Farrell
Ceist:10. Deputy Alan Farrell asked the Minister for Finance his views on the progress in reducing inflation; and if he will make a statement on the matter. [15224/24]
Amharc ar fhreagraWednesday, 10 April 2024
Ceisteanna (10)
Freagraí scríofa
Inflation reached multi-decade highs in 2022, averaging 8.1 per cent 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.
Since then, significant progress has been made in reducing inflation with headline HICP inflation of just 1.7 per cent in March. This is the first time that inflation has been below 2 per cent since June 2021, and is down from 7 per cent in March of last year.
Key to this moderation has been the partial reversal of energy prices from extremely high levels. Energy prices in March are estimated to have decreased by 8.4 per cent compared to March 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.
The disinflation process has also spread beyond energy prices, with inflation falling substantially for food and non-energy goods prices. Food prices are estimated to have risen by just 2.6 per cent on a 12-month basis in March. This is significantly below the 13.3 per cent inflation recorded in March of last year.
However, I am conscious that many households are still facing cost of living challenges, with pockets of inflationary pressure still remaining. This is particularly the case for domestic sectors, especially services. Services inflation in February was 5.1 per cent, more than double the headline inflation rate. In part, this is due to capacity constraints in the economy with the labour market essentially at full-employment and supply-demand imbalances evident in a number sectors, including housing a key policy priority area for the Government, though some of these pressures are easing.
Throughout this period of high inflation, the Government has been at the forefront in supporting the most vulnerable. By responding swiftly, and decisively, 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 will publish inflation forecasts as part of the Stability Programme Update later this month, updating those published alongside Budget 2024.
Question No. 11 answered orally.