Cost of goods to remain high despite inflation slowdown — McGrath 

Finance Minister says the rate of price increases is easing but 'we're not seeing actual reductions'

The cost of goods and services will remain high throughout 2023, despite a slowdown in inflation, the Finance Minister has warned.

The cost of goods and services will remain high throughout 2023, despite a slowdown in inflation, the Finance Minister has warned.

Michael McGrath has welcomed the latest CSO statistics which show that inflation fell to 8.2% in December, a rate not seen since May of last year. However, he said this was a "long way off" the 2% rate the European Central Bank has set as a target.

Prices in Ireland estimated to have risen by 8.2% in the 12 months to December 2022https://t.co/ww7577UB9x#CSOIreland #Ireland #CPI #ConsumerPrices #Inflation #Deflation #Prices #BusinessStatistics #Business #BusinessNews #IrishBusiness #FlashEstimates pic.twitter.com/6VomJZNhQ3

— Central Statistics Office Ireland (@CSOIreland) January 6, 2023

Mr McGrath said: "We do believe that this downward trajectory with inflation will continue and will actually accelerate, particularly in quarter two and quarter three of this year, so that is good news.

"But it does also mean that prices remain elevated at a consumer level, which I think is what people will be most interested in — is how it affects them in the pocket, the prices that they're paying for goods and services that they consume. We're seeing some reductions at forecourts for example, in terms of fuel, but in general, we're not seeing actual reductions, but we're seeing an easing of the rate of increase."

Figures from the CSO on Friday morning show prices in Ireland jumped 8.2% compared to December 2021, down from 9% in November.

Emergency measures

Mr McGrath said the Government had yet to decide what, if any, emergency measures including excise reductions on petrol and diesel, the special Vat rate for hospitality and the Temporary Business Energy Support Scheme (TBESS), will be retained beyond the end of February when they are due to expire.

"When you combine all the sums of money involved, it's quite large. The budget was built on the basis that they would end at the end of February, but we will make a considered judgment closer to the time."

Interest rate increases

Asked whether he expects the European Central Bank to announce further interest rate increases in the months ahead, he said the "right balance" would have to be struck between achieving price stability and not unnecessarily slowing down economic growth across the eurozone.

"That is a difficult balancing act for them to address.

"The reality is inflation is insidious, it does hurt people, it hurts businesses, and it impacts negatively on economies and reduces the purchasing power that people have for the euro in their pocket and that is a concern. 

"So, it is in all of our interest that we do get inflation down. Today's figures are a welcome step in the right in the right direction, but there is still a long way to go to get it fully under control."