The Republic’s Tanaiste Leo Varadkar has called for a “comprehensive anti-inflation strategy” to deal with rising prices, which he said could “go on for years”.
The strategy should include tax indexation, childcare subsidies, a “substantial” welfare and pension package, reduced insurance costs and more social and cost rental homes.
“I believe the spike in inflation is not temporary,” he told the National Economic Dialogue yesterday.
“It could go on for years. It will moderate, slow but I don’t see a return to very low inflation any time soon.
“Governments can do more by helping to reduce some of the underlying high costs that Irish people endure.”
However, he said there was “a limit” to what the Government can do to offset rising energy costs.
Finance Minister Paschal Donohoe hinted at risks to economic growth as the Government wrestles with next year’s budget.
“So many of the risks that we identified as being potential a number of months ago are now the ones that are happening and that we are going to have to deal with,” Mr Donohoe told the same event in Dublin Castle earlier.
In April, the Irish Government predicted the domestic economy would growth by 4.2% this year and 3.9% in 2023), while gross domestic product would expand by 6.4% this year and 4.4% in 2023.
The European Commission and OECD have both trimmed their forecasts since then. While Mr Donohoe said the Government would “not be standing passively by as these kinds of risks develop” he insisted that spending would have to be reined in to maintain the country’s creditworthiness.