Donohoe rules out price controls in any new measures to tackle cost-of-living crisis 

Brendan McDonagh, CEO at Nama; Minister for Finance Paschal Donohoe; and Aidan Williams, Nama chairman, at the launch of the Nama annual report.

The Government will not consider price controls or price caps as part of any new measures to fight the cost of living crisis, Finance Minister Paschal Donohoe has said, and that any new anti-inflation moves won't be taken before the budget in October.    

Speaking at a Nama event, Mr Donohoe said that price caps wouldn't work well in an economy of Ireland's size, telling reporters that the €2.4bn in measures that he had already introduced since inflation started surging last autumn were "more effective" in protecting all households, as well as vulnerable individuals. 

And any new measures to cushion households from inflation won't be taken before his budget in October, the minister said.

The remarks came as new figures showed  consumer price inflation climbed to 7.8% in May, the highest rate for 38 years, and after a meeting of the European Central Bank that paves the way for a series of interest rate hikes starting from next month. The move on interest rates by the ECB is designed to counter inflation as energy and food costs climb across the eurozone following the fallout of the war in Ukraine.

In March, the Government cut the excise duties on petrol and diesel which meant  petrol prices were cut by 20c per litre and 15c were cut from the price of a litre of petrol. However, petrol prices at forecourts have risen again in response to the sustained rise in global crude oil prices over previous weeks. 

On Nama, its CEO Brendan McDonagh said the agency will help deliver a further 3,000 new homes, and has plans for 5,100 more homes with planning permissions lodged, and 1,300 homes on sites that will be sold for development.

Mr McDonagh warned that delivering new homes out to 2025 could be a challenge should construction prices continue to increase rapidly.  

Government ministers have repeatedly said they won’t consider any new cost-of-living crisis package for households and businesses until the budget in October. However, Austin Hughes, chief economist at KBC Bank, said the Government could consider possibly before October certain social welfare measures to limit the huge impact on the most vulnerable from the cost-of-living crisis. 

Kieran McQuinn, economics professor at the ESRI said that government finances were in good enough health to provide some scope to help the hardest hit households. The timing of any such targeted measures would be based on the principles of social equity, he said. Prof McQuinn said the ESRI was still projecting  inflation will peak at  over 8% in the coming months, but average slightly higher than previously thought at 7% for the year.  

KBC's Mr Hughes said inflation could now soon peak at 9%, and possibly at 10% depending on energy prices. May’s figures showed the effect of the war on Irish utility bills, as gas and electricity prices rose by annual rates of 57% and 41%.