The Irish inflation figures for February, published yesterday, show that price pressures overall remain moderate, with the annual rate slowing to 1.8 per cent. The recent inflation peak of 9.2 per cent in late 2022 now seems like a distant memory. The fall is welcome – even if signs of inflationary pressures remain in some sectors. However, the policy problem is that the high level of prices which remains in the wake of the inflationary surge continues to leave many households under some pressure.
There have been a few fresh indicators of this over the past week. Briefing documents given to Minister for Energy Darragh O’Brien show that bills remain 90 per cent higher for gas and more than 60 per cent higher for electricity compared with pre-energy crisis prices. Meanwhile, new research from the Economic and Social Research Institute showed the high levels of poverty among lone parents.
The Government needs to take care in its response. During the sharp rise in prices it introduced emergency measures, many of which benefited all households. These included the expensive energy credits programme, for which another round was introduced in the last budget in an unwise bit of pre-election spending.
There is no case to resume these universal supports in the next budget. They were already continued for too long, providing welcome cash to those who needed it, but also to those who did not. Payments, once introduced, are hard to do away with, but with serious pressures already on public spending the energy credits and other universal measures need to go.
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Instead, the State should concentrate on permanent measures, focused on the households that need support. This is a better use of money and also reassures those households that they are now receiving support on a permanent basis. Budget ministers Paschal Donohoe and Jack Chambers have said this is the direction to go. But there is no doubt that pressure will build for another round of universal payments for “just one more time” as Budget day approaches.
