'We can't stand idly by': Government under intense pressure to tackle cost-of-living crisis 

Ministers have repeatedly said they won’t consider any new cost-of-living crisis package for hard-hit households and businesses until the budget in October.

The Government will find it “extremely difficult” to resist intervening in the cost-of-living crisis before the October budget with the country being hit by “a perfect storm” of price hikes.

The European Central Bank (ECB) announced yesterday it is to raise interest rates next month, its first such move in 11 years, signaling more financial pain for mortgage holders. While there was no formal Cabinet discussion on the ECB move, several ministers voiced their concern to the Irish Examiner about their government’s messaging on the crisis.

Finance Minister Paschal Donohoe has said that the next anti-inflation measures will not be put in place until October's budget, but one minister said: “We cannot stand idly by and not intervene. This is deeply concerning and I am not sure we can wait until Budget time to do something about it.” 

Another minister said they felt there has been “confusion and incoherence” from the various arms of government as to what people can expect.

“Telling people things are bad and getting worse is one thing, but not offering any solutions is not tenable. There are things we can do and must do,” the minister said.

Ministers have repeatedly said they won’t consider any new cost-of-living crisis package for hard-hit households and businesses until the budget in October.

Speaking at a Nama event yesterday, Mr Donohoe said the Government will also not consider price controls or caps as part of any new measures to tackle soaring prices. He again said any new anti-inflation moves won't be taken before 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 such is the scale of the cost-of-living crisis.

Such measures could include bringing forward specific social protection measures to help people most in need by the autumn, he said.

Kieran McQuinn, economics professor at the Economic and Social Research Institute (ESRI) said the Government finances were in good enough health to provide "some scope" to help the hardest hit.

The timing of any such targeted measures before October would be based on an assessment of social equity, he said.

Prof McQuinn said the ESRI was sill projecting inflation will peak at over 8% in the coming months, but average slightly higher than previously thought at 7% for the full year.

KBC's Mr Hughes said inflation could now soon peak at 9%, and possibly at 10%, depending on energy prices.

Sinn Féin’s finance spokesman, Pearse Doherty, said the Government must act and introduce an emergency budget to offset the cost-of-living pressures.

“Inflation hits 7.8% in 12 months to May. Energy prices up 57%. Food prices rise by 5%. The price of home heating oil has doubled. Lower- and middle-income households are hit hardest. Our call for an emergency budget remains. Government's refusal to act is inexcusable,” he said.

Mr Doherty said the highest rate of inflation in 38 years underlines the need for the Government to introduce targeted measures that support low and middle-income households.

“For months, Sinn Féin have called for an emergency budget to provide targeted support to struggling workers and families. It is disgraceful that this government refuses to act while households face the biggest price shock in decades,” he said.

At the 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.

The meeting of the European Central Bank yesterday that paves the way for a series of interest rate hikes starting from next month that will signal more financial pain for Irish mortgage households.

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.

Nama CEO Brendan McDonagh said the agency will help deliver more homes but warned that delivering new housing out to 2025 could be a challenge should construction prices continue to increase rapidly.