Inflation set to surge to highest level in decades, ESRI warns

Inflation in Ireland may soon reach levels not seen in decades, a leading think tank has warned.

A study by the Economic and Social Research Institute (ESRI) said inflation could hit 6.7% this year.

Such a rate of inflation, the highest seen in Ireland in several decades, would worsen the cost-of-living challenge facing Irish consumers.

It comes as the war in Ukraine pushes up prices around the globe.

In the report, published on Wednesday, the ESRI warns: “The Russian invasion of Ukraine will have a negative impact on global economic activity and further exacerbate inflationary pressures, which had already been accumulating.

“The longer the conflict lasts, the greater the degree of uncertainty, which has adverse implications for investment and consumption decisions and international trade.”

While economic growth is expected to slow in Ireland, the ESRI is still predicting growth of 6.2%.

One of the report’s authors, Kieran McQuinn, said: “While the outlook for the Irish economy is still positive in 2022 and 2023, the impact of the Russian invasion of the Ukraine will lower the expected growth rate of the Irish economy and lead to higher rates of domestic inflation.”

Conor O’Toole, also from the ESRI, warned: “The Irish economy entered 2022 showing all the signs of a robust recovery from the pandemic. However, the fast-changing global economic and geopolitical context points towards a worsening economic outlook with numerous headwinds.”