In January 2021, we saw something out of the ordinary, instead of big discounts sprawled across shop windows, we actually saw a rise in prices due to the effects the pandemic had on customers.
However, with the world opening up again, we are seeing prices return to normal. In January 2022, we see consumer prices drop -0.4%, which has now bought our annual inflation to 5.0%, compared to the 5.5% that was registered in December.
What is our biggest problem? Supply issues have impacted on home rental as there has been a huge price rise in confined oil, gas, and the sectors that a home depends on, such as, cars and electric.
The bad news is that energy levels are expected to remain at this high price and for low-income households this can take up a huge amount of their monthly spend.
With this crisis affecting a large quantity of homes, the government introduced a short-term assistance scheme for fixed or low-income households which have been hit hardest by the price increases.
Inflation is expected to peak in the earlier months of the year but unfortunately the chances of inflation staying at a higher rate for longer seems likely.
If this high rate of inflation is to stay, what will the government do when their ‘short-term’ assistance scheme runs out?
Instead of tackling the problem, the Irish government sway towards the introduction of new schemes to help those in need.
However, the issue with handing people the money is that they have created a short-term fix for possibly a long-term problem.
Previously we have seen this is the property sector with the ‘Help to Buy’ scheme and the Housing Assistance Payment being introduced, but what is this doing to help in the long run?
Another example of this is when the government recently announced a decrease in the monthly cost for the Drug Payment Scheme. However, even though medicine prices are high, they did not increase with the recent rise in inflation.
Instead of reducing this cost, the government could have looked at drug pries more broadly by engaging with drug companies and discussing their price benchmarks.
Over the years, the government has missed out on opportunities to reduce costs in a number of sectors, such as childcare, legal and insurance, instead choosing to introduce assistant schemes as a ‘quick fix.’
The government are taking the easy way out to seem as though they are addressing the issue, where in fact they are not tackling or addressing the high rise of inflation.