Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

I thank the Deputy. The underlying causes of inflation are largely international and outside our control. They relate to supply chain difficulties that arose particularly during the pandemic, when supply chains were disrupted. A post-pandemic international economic boom occurred when pent-up demand was released when lockdowns were eased. Central banks have also printed trillions of dollars. When central banks have very low interest rates and print trillions of dollars through quantitative easing, things that cannot be printed become more expensive. We know that from history. That is why central banks will have to rein in quantitative easing next year. Central banks in the US and UK have already increased interest rates to help bring inflation under control.

The positive news from the ESRI is we anticipate inflation, which is now very high, will top out and start falling next year. The Nevin Economic Research Institute, which is run by the trade unions, has made a similar prediction that would see inflation come back under control next year. That said, we need to help people with the cost of living. That means pay rises, which kick in in January. There will be welfare and pension increases in January. There will be tax cuts for middle income workers and we will help to reduce the costs of public services.

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