Extra cost-of-living measures or Social Protection rate increases on the scale of those put in place in recent years will not be required to maintain living standards in the medium term, the Department of Public Expenditure and Reform has told senior politicians.
In a briefing note prepared for the recent government formation talks, it said moderate levels of inflation were forecast for the years ahead.
The department said that over the 2022-2025 period government spending on cost-of-living and tax-expenditure measures was estimated to be €37 billion.
“Of this, €13 billion has been spent on temporary measures such as electricity credits and Social Protection lump sums,” it said. “The remaining €24 billion relates to expenditure on permanent measures introduced since 2021, such as Social Protection core rate increases.”
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The department said that core Social Protection rates had been increased by €12 a week in each of the last three budgets. It argued that while these rises had not fully offset the impact of inflation, this was achieved when temporary cost-of-living measures introduced by the Government were taken into account.
“The gap between core rates and inflation opened in 2022 as a result of the very significant inflation experienced that year. In subsequent years, consistent increases have gradually closed this gap,” it said. “As of 2025 the core gap has been closed on the individual jobseeker benefit rate, meaning real income for those recipients is above its 2021 purchasing power.”
The department said the gap between the state pension and inflation had “closed considerably as of 2025, though the rate remains marginally below its 2021 purchasing power”.
“Given the moderate levels of inflation projected over the medium term, it is not anticipated that weekly rate increases on the level of those in recent years will be required to maintain living standards for Social Protection recipients”, the department told Fianna Fáil leader Micheál Martin, Fine Gael’s Simon Harris and their advisers during the formation of government talks last month.
The department said that average household incomes had “generally maintained their real value over the inflationary period”.
“Notwithstanding a fall in real income in 2022 among some groups, household incomes have recovered or exceeded the 2020 real value,” it said.
“This is due to strong private income growth, driven by wages and other income sources, in addition to the positive impact of government cost-of-living measures.”
The department said all income quintiles had experienced real income growth, but that the “higher quintiles have experienced the greatest growth in nominal terms, driven by strong wage growth among higher earners and personal tax changes”.
“In terms of household composition, all groups are anticipated to have maintained or exceeded average real income between 2020 and 2025,” it said.
Working–age groups are expected to have performed most strongly in real terms, driven by wage growth.
