Dr. Kieran McQuinn:

On the temporary or transitory issue versus permanent, taking the broad overview of the kind of inflationary pressures in the Irish economy now, there are four main issues: the energy costs, which Dr. Farrell spoke about; supply chain issues; the base effects; and the housing costs. Those are the four ways that we look at it in overall terms. The base effect issue will resolve itself over the next period. Most people seem to think that supply chain issues will be resolved in the next six to nine months as economies come back on stream and normal economic activity begins to convene across most countries. Dr. Farrell spoke of easing of pressures around energy costs. The vast majority of the pressures there at present should begin to resolve themselves quite considerably over the next six to nine months. The housing issue is where you could see a lingering effect beyond that. Ireland is not the only country experiencing this phenomenon. Housing costs are increasing across Europe and even in North America. Those relate to a lot of factors, some of which are connected, such as the build-up of savings during the pandemic. However, between house prices and rents you will see upward pressure over the next six to nine months and even beyond that. We would be reasonably confident that the other pressures will begin to abate. Initially, policymakers were quite confident in asserting that they felt it was a temporary transitory issue and giving dates for when they saw the inflationary pressures ease. I think there is a little less confidence now and people are coming around to the view that the pressures will last a little longer than initially thought and that the inflation rates will be a little higher. However, I think the basic core drivers of inflation are issues which should be resolved in the next six to nine months.