Peadar Tóibín (Meath West, Aontú)
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113. To ask the Minister for Finance if his attention has been drawn to a prediction by the Governor of the Central Bank that inflation rates will continue to rise; and if he will make a statement on the matter. [56213/22]

Michael McGrath (Cork South Central, Fianna Fail)
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Consumer price (HICP) inflation picked up sharply over the past year, with annual average inflation of just over 8 per cent recorded in 2022, compared with around ½ per cent over the past decade. Every advanced economy is in the same position, with euro area inflation averaging 8.4 per cent last year.

As highlighted in their latest Quarterly Bulletin in October, the Central Bank forecast an easing of headline inflation from the fourth quarter of 2022, broadly consistent with the Department’s perspective at the time of Budget 2023 in September.

Since then inflation has remained elevated, at 8.2 per cent in December, but has moderated relative to the peak of 9.6 per cent reached last summer, and 9.4 as recently as October. This faster than anticipated easing of the inflation rate is explained largely by movements in wholesale energy prices. Following a surge in prices over the summer and early autumn, gas prices have moderated in recent months. This primarily reflects the milder winter, high European gas storage levels and sufficient LNG supplies with market prices now at around £1.70 per therm, compared with £4 per therm at Budget time. Oil prices have also declined due to the slowdown in global demand.

This easing in wholesale energy markets suggests that inflation has now peaked and is on a downward trajectory. That said, the inflation rate is expected to remain high over the coming months, with a more pronounced easing of the inflation rate anticipated from the second quarter of this year as ‘base effects’ drop out of the annual rate. Despite this, the price level consumers face will remain elevated. Furthermore, due to continued energy supply concerns there remains significant uncertainty around the outlook for inflation.

To prevent inflationary pressures becoming entrenched, central banks across advanced economies have tightened monetary policy, with the ECB raising interest rates by a cumulative 2½ percentage points since last July - the fastest pace of tightening in the history of the single currency. As Minister for Finance, monetary policy is not a part of my remit and it would be inappropriate for me to comment or speculate on the setting of Eurozone interest rates.

My Department will continue to monitor incoming economic developments closely and will publish updated inflation forecasts in the Stability Programme Update in April.