Inflation forecast to largely cancel out pay rises as energy price hikes 'erode' disposable income

The Central Bank said 'expectations around real wages have declined'

In its latest quarterly bulletin, the Central Bank is projecting that inflation is expected to hit 3.5% throughout this year before falling to 2.9% next year, and 2% in 2028.

The recent surge in inflation is expected to eat into wage increases through the rest of this year as higher energy prices continue to “erode” real household disposable incomes leading to a more “subdued” consumption growth, the Central Bank of Ireland said.

In its latest quarterly bulletin, the Central Bank is projecting that inflation, driven by the spike in energy prices resulting from the conflict in the Middle East, is expected to hit 3.5% throughout this year before falling to 2.9% next year, and 2% in 2028.