Finance | Inflation control efforts
To ask the Minister for Finance the extent to which efforts continue to control inflation; and if he will make a statement on the matter.
Consumer price (HICP) inflation has picked up sharply over the course of this year and stood at 9 per cent in August. Almost every advanced economy in the world is in the same position, with inflation rates of 8.3 and 9.1 per cent recorded in the US and euro area respectively in August.
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. However, as highlighted in the correspondence, pass-through price effects from higher energy prices are increasingly being felt in other sectors. Indeed, non-energy or ‘core’ inflation has picked up sharply in recent months and stood at 6.2 per cent in August, suggesting inflationary pressures are increasingly broad based.
The Government recognises the impact rising prices have had on households and businesses across the country and has taken significant action. Some €2.4 billion in cost of living measures has been announced since last October. Looking ahead, the Government will continue to address these challenges head on. 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.
The Government supported households and firms through the pandemic and will continue to do so in the face of unprecedented energy price spikes caused by Putin’s war. However, we must be cognisant that resources are limited and the Government has to balance the appropriate response to the increased cost of living in Ireland with the very high 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.
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