Paschal’s bum steer amplified our shock at rampant inflation
PASCHAL DONOHOE told us in his budget statement in the middle of October that the rise in inflation was partly the result of temporary factors that he expected would fade over time. Another bum steer from Government, because the one thing we can all agree on now is that the current rash of rising prices is anything but temporary.
Back in October, the Finance Minister, presumably with an army of experts and other resources feeding him economic intelligence, said price hikes would be at 3.7% by this February, the highest in 14 years. He anticipated prices would ease after a ‘normalisation of oil prices’.
In fairness he also highlighted supply-chain pressures, including shipping capacity, shortages of raw materials and labour shortages as well as higher energy costs, as inflationary concerns. But the clear impression we were all left with was that prices would return to normal in a reasonably short period of time.
At the same time the European Central Bank was saying it had no intention of raising interest rates this year, another indicator that the 447 million people across the EU should dial down any inflation concerns.
This was despite price increases hitting 5% in December.
And ECB chief economist Philip Lane – former Irish Central Bank governor – has also been calming inflation nerves, telling RTÉ last month that prices would ease later in the year.
It’s little wonder, therefore, that
there’s a growing sense of shock and anger among regular members of the public that inflation has now
become such a torment, after a succession of commentaries reassuring us there was little enough to fear. All our inflationary chickens came home to roost on Thursday when the European Commission predicted annual inflation of 4.6% in Ireland this year, much higher than the 3.5% for the eurozone as a whole – and way up on its 3.1% forecast of only a few months ago.
As people see the value of their euro dwindling in front of their eyes, there can be little surprise about the lacklustre response to the Coalition’s anti-inflation package this week, which will impose a further €500m on our already huge national debt and was spread so thin as to have little impact.
Predictably, Sinn Féin attacked the Government’s Scroogelike response, preferring instead its own €1.5bn cost-of-living measures.
In another dreadful and financially reckless example of Late Late Show politics, Sinn Féin had something for everyone in the audience including a tax rebate of a month’s rent for renters and one-off cash payments to everybody earning up to €60,000 a year. There seems to be no limit to how much of our money it is prepared to spend to win power.
Micheál Martin’s historic Government is now likely to be seen as the most unlucky in the history of the State. It inherited the triple disasters of housing, homelessness and healthcare from the previous lot and then, out of the east, came
Covid.
Now, with the War on Covid – hopefully – in the mopping-up phase, along comes inflation, turning the public mood to resentment and disappointment.
The Irish Congress of Trade Unions is suggesting wage hikes of between 3.5% and 5.5% in a move that could knock industrial relations back into the turmoil of the mid-1980s.
And then there’s Mr Putin playing war games on the Ukraine border, with nobody at all sure where such brinkmanship could end. Let’s hope it is only inflation we have to concern ourselves with.