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Inflation to hit a 8.5% and energy rationing possible 

Surging inflation, lower economic growth and even possible energy rationing are some of the difficulties faced by Irish people according to the latest quarterly bulletin from the Economic and Social Research Institute (ESRI).

The ESRI said that inflation is expected to surge to 8.5%  or even higher in the coming months, a level not seen in the country since the grim economic days in the 80s. 

“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,” the ESRI’s Kieran McQuinn said.

He warned that headline inflation was expected to peak at 8.5 per cent or possibly higher in June or July of this year and that inflation would average 6.7 per cent for the year as a whole.

The think tank also warned that the cost-of-living shock poses “significant downside risks”. 

The impact on household spend will be immediate, as incomes – in real terms, meaning what households can actually purchase given increasing costs – will fall by about €1300 for a typical household this year. 

Rising energy prices may lead to a period of energy rationing if the crisis deepens, the report also warned. 

“There is a considerable risk that, should tensions increase, further disruptions to gas and oil supplies might occur, and in a worst case, end-user rationing might be required in Europe, ” it said.

The ESRI slashed its forecasts for expected growth in the Irish economy from 13.6 per cent to 6.2 per cent this year. 

The dismal forecasts come as the country scrambles to prepare for up to 200,000 refugees from Ukraine, amidst a housing crisis.

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