Charlie McConalogue (Donegal, Fianna Fail)
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112. To ask the Minister for Finance the modelling his Department is undertaking to examine the impact of Brexit on the price of grocery goods here; the financial impact this modelling shows Brexit may have on a family's weekly shop; and if he will make a statement on the matter. [35785/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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Inflation has been subdued over the last number of years. When calculated based on the Harmonised Index of Consumer Prices (HICP), inflation increased by just 0.3 per cent on an annual basis in 2017. This represents the fifth consecutive year in which inflation has been below 1 per cent.  The weakness in inflation in recent years reflects inter alia the impact of euro-sterling appreciation, following the UK referendum, on consumer prices in Ireland and in particular on the price of goods.

Indeed, since the UK referendum goods prices have declined by 3½ per cent and food prices have declined by almost 5 per cent. The contraction in the price of goods reflects, in part, the importance of the UK market as a source of imported consumer goods for Ireland.

Whilst there remains significant uncertainty surrounding Brexit, it is clear that any barriers to trade will have a negative impact on Irish growth. Analysis by my Department and the ESRI suggests that in the absence of a trade deal with the UK, Irish GDP could be almost 4 per cent below what it otherwise would have been in a no-Brexit scenario after ten years.

In relation to consumer prices, ESRI research indicates that Brexit could result in a potential increase in the level of CPI of between 2 to 3 per cent, relative to a no-Brexit baseline. This is equivalent to an increase of between €892 and €1,360 in the annual cost of the consumption basket for the average household. However, this assumes that there is no switching or changes in expenditure patterns in response to the price increase and is therefore an upper bound estimate of the impact of Brexit on consumer prices.

The best way to mitigate such risks is to improve the resilience of the economy. The Government will play its part by continuing to implement competitiveness-oriented policies – including those that address emerging bottlenecks – and ensuring that the public finances continue to be managed in a prudent fashion.