Central Bank on lookout for unjustified 'damaging wage increases'

The bank's latest quarterly outlook is nonetheless its most upbeat since the start of the Covid-19 crisis, and confirms the Irish economy is recovering rapidly.

The Central Bank is on the lookout for “damaging wage increases” as it forecasts inflation will stay higher for longer right up to the summer months.

The bank's latest quarterly outlook is nonetheless its most upbeat since the start of the Covid-19 crisis, and confirms the Irish economy is recovering rapidly, with the Government finances in “remarkably” good shape and unemployment set to fall back to pre-pandemic levels.

As a result, the bank said it will scan the economy across both the private and public sectors for any sign that wage hikes are taking hold that cannot be justified by productivity gains.

Hit to living standards

Stubbornly high inflation could yet hit the living standards of many of the lowest-income households, the Central Bank has warned, with some households “disproportionately” losing out from the surging costs of heating, lighting, and transport.

Amid the Ukraine crisis, prices of wholesale European gas, which Ireland needs to generate much of its power, were yesterday at historically elevated levels for delivery in the coming months.

A further remarkable outcome of the pandemic has been the record level of women now making up the workforce, possibly because working from home has allowed women to balance the demands of childcare with work, said Mark Cassidy, director of economics and statistics at the bank.