The speed at which the cost of living crisis took hold early last year caught almost everyone off guard. Just as people were looking forward to a return to normality – and even a post-Covid economic bounce – soaring prices fuelled largely by the war in Ukraine plunged Ireland and many other countries into a fearful gloom from which it has proved difficult to emerge.
The impact of general inflation rates which have come close to 10 per cent and far exceeded that in some areas, have been well documented and when the higher cost of energy, fuel, food and home loans are added up, many Irish households will be worse off by in excess of ¤5,000 in 2023 when compared to the pre-crisis period.
The Government has responded to the soaring cost of living with a series of budgetary measures including energy credits, additional welfare payments and modest tax cuts and while such steps have gone some way towards cushioning the financial blows felt by many, the pain for many Irish households and businesses remains acute.
What happens next will determine how enduring that pain will be. Rates of general inflation appear to be stabilising – and perhaps even easing, according to the latest data – in Ireland and across Europe. There is some hope that the worst of the energy crisis may be over with fuel prices on Irish forecourts falling significantly in recent weeks and the cost of oil and gas on wholesale markets dropping precipitously.
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There is, however, no sign of a shift in the ECB’s monetary policy which has seen it roll out multiple interest rate hikes since last June with warning of more to come. The increases have added hundreds of euro on to many mortgage holders’ monthly repayments and will drive fixed and variable rates higher this year.
The Government has promised that there will be no cliff edge when it comes to the measures introduced to ease the burden of the crisis on individuals and businesses and it is to be hoped that it will be true to its word, with the financial security of so many still hanging in the balance.