The fall in inflation to its lowest rate in over two years has been welcomed, but there are warnings there may be a sting in the tail of the cost-of-living crisis.
The Department of Finance will tell the Public Accounts Committee today that the impact of higher interest rates has yet to be “fully felt”.
Inflation has fallen to 2.3 per cent with the Central Statistics Office (CSO) attributing the fall in part to declining energy prices which are 9 per cent less than at the same point last year.
Minister for Finance Michael McGrath welcomed the data and said lower energy costs, when combined with Government support, would lead to lower households’ bills in the months ahead.
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While the fall in the rate of inflation could see the European Central Bank (ECB) soften its monetary policy following 10 rate hikes, the Department of Finance’s secretary general, John Hogan, will today warn the Public Accounts Committee that the impact of the ECB’s policy has yet to be fully felt.
“Monetary policy acts on economic conditions with a lag,” Mr Hogan said. “The cumulative effects of the increase in rates has likely not been fully felt yet, either in Ireland or globally.”
It has also emerged that the State’s consumer watchdog has no plans to carry out an investigation into the pricing of branded products despite its counterpart in the UK releasing a report suggesting suppliers have contributed to food inflation by pushing up prices by more than their costs.
The UK’s Competition and Markets Authority said an inquiry into the food and groceries sector, launched in July, suggested that up to three-quarters of branded goods makers, notably baby formula makers, had increased their profitability and contributed to higher food price growth.
In response to queries from The Irish Times on Wednesday, the Competition and Consumer Protection Commission (CCPC) said it had not carried out a similar study in the Republic with no retailers or brands examined in analysis released last June.
“Generally, traders in Ireland are free to set and change their prices for goods and services and charging high prices is not, of itself, generally a breach of competition or consumer protection law,” it said. “In a competitive market, traders who attempt to significantly increase their profit margin through price increases are likely to lose market share because consumers will switch to competitors.”
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