Enterprise; Trade and Employment | Cost of Living increases causes and solutions
To ask the Tánaiste and Minister for Enterprise; Trade and Employment the extent to which he and his Department have identified cost of living/price increases that are not directly related to any particular or specific issue; the way such increases can be remedied; and if he will make a statement on the matter.
To ask the Tánaiste and Minister for Enterprise; Trade and Employment the extent to which individual cost items have been identified where small or sole trade enterprises are under increasing pressure from various cost of living increases from whatever source; if such assistance is manifest in the current climate; and if he will make a statement on the matter.
To ask the Tánaiste and Minister for Enterprise; Trade and Employment the degree to which he and his Department have identified the individual cause(s) of price increases leading to cost of living inflation; the extent to which solutions can be found; and if he will make a statement on the matter.
Price movements are primarily measured through the Consumer Price Index (CPI) and the Wholesale Price Index (WPI) published by Ireland’s national statistical office, the Central Statistics Office (CSO). My Department has not undertaken an analysis of price increases which are unrelated to any particular issue, but it actively monitors price developments through these price indices and regularly engages with the CSO.
A combination of issues was responsible for the initial rise in prices since mid -2021, including the rapid recovery in the domestic economy following the COVID-19 shock, international supply chain bottlenecks partly related to China’s zero COVID policy stance, and base effects relating to weak price trends in 2020.
The Russian invasion of Ukraine has led to a further pick-up in the rate of inflation. These geopolitical events have put exceptional upward pressure on gas and oil prices, and in turn electricity prices. These rising energy prices have been largely responsible for the rise in overall inflation (headline inflation) since early 2022, and in more recent months this has spilled over to core inflation (headline inflation minus energy prices). Headline inflation, measured by the CPI, rose by 8.2% between September 2021 and September 2022. Core inflation, measured by the CPI excluding energy products, rose 5.5% over the same period. In January 2022, headline inflation rose by 5.0% from January 2021, while core inflation rose 3.1% over the same period – much closer to the 2% overall inflation target. However, the rate of inflation as measured by the CPI has been decreasing since July, with the CSO reporting no change in the overall monthly inflation rate from August to September.
The impact of rising prices is not unique to Ireland, but an issue facing all major economies around the world. For instance, in September 2022, the annual inflation rate was 9.9% for the euro area, 8.2% for the US, and 10.1% for the UK. Ireland imports over 70 per cent of our energy use and the Government cannot fully insulate individuals and businesses from developments in international energy markets that are outside of our control.
However, the Government has been proactive in putting in place measures to remedy the fallout from higher rates of inflation through introducing a €505 million package in February of this year, including measures such as a lump sum payment of €125 on the fuel allowance to 390,000 recipients, temporary 20% reduction in public transport fares applicable from April 2022, a reduction of the drug payment scheme to €80, and the working family payment increase announced on Budget Day 2022 was brought forward from 1 June to 1 April. The Government also approved an Electricity Costs Emergency Benefit Scheme payment of up to €200 to be made this year to an estimated 2.1 million domestic electricity account holders and a lump sum payment of €125 for those in receipt of the fuel allowance, and there were also increases in the allocation of Early Learning and Care and School-Age Childcare to ensure childcare prices do not rise.
Furthermore, in September this year a significant package to help businesses and households with the rising cost of living and doing business was announced as part of Budget 2023. This package includes measures to help with the cost of energy, for example. An electricity credit of €600 to be applied to all household’s electricity bills and a €1.25 billion Temporary Business Energy Support Scheme which will provide qualifying businesses with up to 40% of the increase in electricity or gas bills – when compared to last year – up to a maximum of €10,000 per month. Other measures in the cost of living package include: a new Growth & Sustainability Loan Scheme, which will make up to €500 million in low-cost investment loans of up to 10 years available to SMEs, with no collateral required for loans up to €500,000 and an increase in the Standard Rate Cut Off Point by €3,200 to €40,000.
My Department are also raising awareness around energy efficiency, helping businesses reduce the amount of energy they use and improving take-up of existing schemes already in place such as the Green4Micro programme and the Climate Toolkit for Business. Other financial assistance includes the SEAI Community Grant, SEAI energy audit vouchers and grants for microgeneration. The Local Enterprise Offices also act as a ‘first stop shop’ for providing advice and guidance, financial assistance, and act as a ‘signposting’ service for all government supports available to business owners throughout the country. Further information on the available business energy assistance can be found on my Department’s website: Energy supports – DETE (enterprise.gov.ie)
Finally, the National Competitiveness and Productivity Council published the ‘Ireland’s Competitiveness Challenge 2022’ report last month setting out a range of recommendations that address both immediate competitiveness issues and more medium- and long-term challenges. The Government will publish its response to these recommendations in due course. The Government will also keep the energy situation under constant review, and we will continue to examine what measures are possible to manage the impact of rising energy prices.
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