Gerald Nash (Louth, Labour)
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85. To ask the Minister for Finance if he has read the recently published ECB paper entitled 'How tit-for-tat inflation can make everyone poorer'; if he is concerned at the evidence that profit-taking is contributing to price gouging and elevated levels of inflation; the action the Government plans to take in this regard; and if he will make a statement on the matter. [21440/23]

Michael McGrath (Cork South Central, Fianna Fail)
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In Ireland, inflation stood at just over 8 per cent for 2022 as a whole, significantly higher than the ½ per cent average rate of inflation recorded for the previous decade. However, it is important to bear in mind that almost every advanced economy is in a similar position, with inflation in the euro area reaching an average of just under 8½ per cent last year.

At the root of this period of multi-decade high levels of inflation was a surge in global energy prices as a result of Russia’s invasion of Ukraine early last year. What started as an energy price spike has become increasingly broad based, with spillover price pressures from higher energy prices becoming evident in other sectors such as food (via higher fuel and fertiliser costs) other goods and services.

Due to varied pricing strategies it may take some time for wholesale price changes to be reflected in retail prices. Ultimately the setting of markets prices are a commercial matter and decisions around price setting are a matter for each individual commercial entity.

The Government is acutely aware of the impact of rising prices on households and has provided €12 billion in cost of living supports to date to those most in need. Many of these measures have been one-off or temporary in nature, ensuring timely and targeted support to the most vulnerable households without adding to inflationary pressures.

While inflation in Ireland remained elevated at 6.3 per cent in April, this marks a decline of over 3 percentage points from 9.4 per cent in October. These latest developments support the idea that inflation has now passed its peak and is on a downward trajectory. My Department recently forecast annual inflation of 4.9 per cent for this year compared to last, which is a significant downward revision on what was expected at the time of Budget 2023.

Despite this easing, the price level consumers face will remain elevated. Furthermore, ‘core’ inflation (excluding energy and unprocessed food) appears to be ‘sticker’ than initially assumed, and remained elevated at 5.3 per cent in April. As outlined in the ECB’s paper, wage and price spirals have the potential to drive ‘core’ inflation higher for longer. My Department closely monitors these trends and explicitly identified the emergence of a wage-price spiral as a risk to the outlook in the recent Stability Programme Update.

My Department will continue to closely monitor inflationary developments over the coming months, including the underlying drivers of inflation, and will ensure that the correct steps are taken to manage the ever-evolving situation.