Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I propose to take Questions Nos. 70, 90 and 238 together.

Inflation reached multidecade highs in 2022, averaging 8.1%, with a peak of 9.6% in June 2022, as measured using the harmonised method of the harmonised index of consumer prices, HICP. While the initial driver of this inflationary pressure was a surge in global energy prices, it subsequently became increasingly broad-based as price pressures spread throughout the economy. Since then, enormous progress has been made in reducing inflation, with headline HICP inflation of just 1.6% in April. Looking forward, my Department forecasts an inflation rate of just over 2%, on average, across this year as a whole.

The temporary and targeted nature of Government budgetary measures over this period of high inflation has been crucial in protecting households from the burden of the rising cost of living while avoiding adding to inflationary pressures. Research has shown that these measures were progressive, with those most in need benefiting the most. As part of budget 2024, the Government announced a package of once-off measures, net of windfall gains from the energy sector, amounting to €2.7 billion. This built upon multiple cost-of-living packages introduced over the past two years, which amounted to €12 billion.

While these exceptional supports helped households and businesses to absorb the worst impact of rising prices, inflation is now, thankfully, on a downward trajectory. I am conscious of the need for clarity on how this new environment will affect policy decisions in the context of our budgetary framework. The appropriate way to do this is as part of a normal budgetary process. In this regard, I will discuss economic policy issues with stakeholders as part of the national economic dialogue later this month.

I will then set out the broad parameters for the upcoming budget in the summer economic statement which we intend to publish prior to the recess in July.

See this speech in context