Aindrias Moynihan (Cork North West, Fianna Fail)
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217. To ask the Minister for Finance the measures he is taking to ensure the current reductions in inflation will be passed on to consumers nationally; and if he will make a statement on the matter. [21498/23]

Michael McGrath (Cork South Central, Fianna Fail)
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The main driver of inflationary pressures over the past year has been Russia’s invasion of Ukraine and the energy market pressures that followed. Consumer price (HICP) inflation picked up sharply over the last year and averaged 8.1 per cent for 2022 as a whole, peaking at around 9½ per cent last summer.

Energy prices have now retreated from the highs reached last year. In particular, wholesale gas prices have moderated significantly from the peak of £4 per therm reached last August, with spot prices currently in or around £1 per therm of late. Oil prices have also declined from their 2022 peak and now stand at around $80 per barrel.

The easing in wholesale energy markets suggests that inflation has now passed its peak and is on a downward trajectory. While wholesale prices for natural gas have fallen from their highs of last summer, the full pass-through to households will occur with a significant lag due to the hedging strategies of suppliers. Price setting is a matter for individual suppliers and the timing around any future price changes will largely depend on individual hedging strategies of each supplier.

It should be noted that if retail electricity and gas prices had followed wholesale prices last year there would have been a more significant and rapid increase in retail prices. The opposite effect appears to be at play with higher wholesale prices that were ‘bought forward’ over the last year or so affecting today’s retail prices.

In the meantime, government has responded swiftly and decisively in assisting households through this period of elevated inflation. A total of €12 billion in cost of living supports have been announced to date, including the reduction in excess duties and VAT on electricity and gas, along with the provision of electricity credits to each household. The measures implemented have been carefully targeted in order to ensure that help is given to the most vulnerable households without inadvertently adding to inflationary pressures.

While inflation in Ireland remained elevated at 6.3 per cent in April, this marks a decline of 3 percentage points since October. Looking ahead, inflation is anticipated to continue to moderate over the course of the year and average 4.9 per cent for 2023 as a whole. However, there remains considerable uncertainty around the outlook for inflation.