Mr. Brendan O'Connor:

It already has reached us. It has been in the system since around this time last year. Goods were declining in price year on year for the guts of a decade, which was curious because the question arises as to whether the prices will eventually fall to zero. The trends for services, on the other hand, were positive. If I had showed the committee a chart on inflation, we would see an upward line, not very steep, at about 0.5% per annum. The trends for services were all positive and those for goods were all negative, but that just abruptly stopped last year as we flipped out of the pandemic because of all these blockages associated with the pandemic, some of which remain, such as the issues in China the Deputy mentioned. While there is evidence that some of those blockages are easing - I mentioned motor vehicles in the US - our inflation projections completely bake them in. Non-energy, non-food core inflation will be 4% this year. These are really high numbers in the context where, as I said, goods prices were trending towards zero, but that is not unique. Every country is facing it. In the US, core inflation was 6.2% in the month of April, which is really high.

This takes us back to the point we were making earlier, namely, that countries that are not producers of raw materials or fossil fuels are becoming poorer as a whole because the costs of their imports globally are increasing. It has to be a case of burden-sharing. We talked about the energy measures earlier. They were an effort on the part of the Government to target and point at certain imports. This leads me to the Deputy's first question, about the economic evidence. He is quite right about the Central Bank research, and OECD research, published in a blog today or yesterday, shows the very same point in a cross-country sense. Of course, lower income households spend more of their income on staples, as do older and rural cohorts, depending on their energy mix. The best way to focus on that relates to income. We should examine income groups and the analysis that is generally based on income. Most of the analysis we and the Economic Social Research Institute, ESRI, have conducted seeks to find the impact of budgetary measures on various income groups. It is correct to say older households are more severely affected, but not all older households will be in the first, second or third deciles. In fact, what we should care about is the intersection between low income and older age. The evidence to date, based on the analysis of the budget we carried out, the analysis the ESRI conducted on the February and March package and further analysis we have done on all of that, has consistently shown that the highest gains from these measures have always been in the lower income groups.