Alan Farrell (Dublin Fingal, Fine Gael)
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70. To ask the Minister for Finance to provide an update on his Department's efforts to reduce inflation; and if he will make a statement on the matter. [22752/24]

Bernard Durkan (Kildare North, Fine Gael)
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90. To ask the Minister for Finance the extent to which he remains confident that budgetary measures taken here are adequately focused in order to discourage inflation, self-generated or imported; and if he will make a statement on the matter. [22706/24]

Bernard Durkan (Kildare North, Fine Gael)
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238. To ask the Minister for Finance the extent to which he remains confident that budgetary measures taken here are adequately focused in order to discourage inflation, self-generated or imported; and if he will make a statement on the matter. [22988/24]

Alan Farrell (Dublin Fingal, Fine Gael)
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My question relates to the ongoing efforts by the Minister's Department to reduce inflation. Significant domestic and international factors have reduced inflation over the recent period, which I acknowledge. I believe, though, that more needs to be done in this regard. My question relates to what measures the Minister is proposing to introduce in the coming months in an effort to reduce inflation.

Michael McGrath (Cork South Central, Fianna Fail)
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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.

Alan Farrell (Dublin Fingal, Fine Gael)
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I acknowledge all of those measures, particularly the temporary measures. I acknowledge of course the nature of them and their careful impact on the inflation rate. However, part of the reason I asked this question was to do with what I would refer to as ongoing creep, particularly in the inflation on consumer goods, services and fuel, which remains stubbornly high. We are 15 cent or 20 cent a litre off what I would describe as a crisis when we were getting two, three or four emails a day from constituents, observing the high costs of fuel. That is going back to 2022. Are there additional measures that perhaps the Minister will consider in the context of the budget? He does not necessarily have to mention them today. However, I believe there should be scope for measures which have the potential to reduce consumer costs.

I acknowledge the past work done by the Minister with regard to certain large multiples who have reduced their prices. I have not observed that of late.

Bernard Durkan (Kildare North, Fine Gael)
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On the same lines, I ask the Minister the extent to which his Department remains vigilant in relation to the actual causes of the inflation affecting a large range of consumer goods. In themselves they do not seem greatly worrying but put together they constitute a fairly sizable impact insofar as the purchaser, the consumer, is concerned and they gradually eat away into the confidence of the consumer. I ask whether, at this stage, measures continue to be taken to drill down into the actual reasons put forward in certain situations but in all situations where the inflation becomes a threat to the economy.

Michael McGrath (Cork South Central, Fianna Fail)
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The dynamics of energy prices have been key in driving the headline inflation rate over recent years. The initial driver of inflation was a surge in energy prices that followed the Russian invasion of Ukraine. This substantially disrupted the supply of energy, in particular of natural gas, of which Russia was a large exporter to Europe. Wholesale gas prices peaked at £4 per therm in September 2022 having averaged £0.50 per therm prior to the pandemic. The increase in wholesale gas prices subsequently translated into higher retail prices. There was annual energy price inflation of at least 30% in every month from March 2022 to January 2023. In the past few months we appear to have turned a corner with energy prices. Wholesale gas prices for the past three months have averaged roughly £0.70 per therm. In April we witnessed a 6.3% annual decline in consumer energy prices. That speaks to the point I made earlier, that we have not yet seen the full pass through of the wholesale reductions to the retail level. I anticipate we will see further reductions at a retail level. Notwithstanding that some energy companies bought into futures contracts, hedged, and so on, I still anticipate that there will be further reductions at a retail level.

Alan Farrell (Dublin Fingal, Fine Gael)
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I thank the Minister. I appreciate those remarks and acknowledge of course that the home energy costs in particular are high because of those futures contracts that were entered into. I hope we will see a further reduction. As I said, the main point of my question was to determine whether additional measures would be introduced to try to lessen the burden of costs that have been borne by our constituents throughout the country over the past number of years, some of which, as the Minister rightly pointed out, have yet to dissipate. However, I acknowledge the measures the Minister's colleague in government, the Minister, Deputy Peter Burke, among others has introduced with regard to small businesses. I hope there will be a focus on this in the context of the drawing up of budget 2025.

Bernard Durkan (Kildare North, Fine Gael)
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In regard to fuel prices and possible reductions in the international markets, how is it determined that those reductions or increases can be transferred to the consumer, to benefit the consumer? From past experience we know that when increases are on the horizon, they are passed on quickly to the consumer and have a dramatic effect. While almost all consumer goods now are transported in one way or another, fuel costs obviously have a serious impact. To what extent can the Minister determine the validity of the increases causing inflation which are put forward by such companies?

Michael McGrath (Cork South Central, Fianna Fail)
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I thank the Deputies. We are at a point in the budgetary cycle where we have published the stability programme update. We will have the national economic dialogue next month and then we will have the summer economic statement and will consider all of the issues that the Deputies have raised in deciding on the budgetary parameters. Then, more particularly when deciding on the individual measures, we need to strike a balance between recognising that the cost of living remains high. Even though headline inflation is falling that does not mean price levels are falling. However, on the other hand, we need to allow inflation to fall and the Government should not do anything that results in a further spike in inflation, because it is in all of our interests to get it down to that consistent level of around 2%, not just in Ireland put in the European Union and especially in the eurozone, to allow the European Central Bank to reduce interest rates. The issues are inextricably linked. The budget is a number of months away. I will take on board all of the points that the Deputies have made, when it comes to making specific decisions.

Catherine Connolly (Galway West, Independent)
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There is less than one minute left so Deputy Moynihan has 30 seconds just to raise the question.