NEW RESEARCH FROM the Central Bank is showing that current levels of inflation are impacting more on lower-income, rural and elderly households, leading to a higher cost of living.
There has been an increase in concern around the cost of living in recent weeks, with the Government unveiling a package of measures earlier this month in an attempt to ease the burden of inflation.
Currently, the Central Bank are forecasting that inflation levels will average at 4.5% for 2022, before declining to 2.4% in 2023.
Their new research, published today, shows that certain types of households are being impacted more than other households, primarily due to the rising cost of energy and fuel.
The research finds that, relative to higher-income households, lower-income households spend a greater portion of their income on energy and food, while spending less on goods and services.
“Headline inflation was 5.7% for the average household in December 2021, but is higher for rural (6.2%), lower-income (6.1%), owner-occupier and older households (both 6%),” a spokesperson for the Central Bank said.
In particular, of the 6.2% inflation experienced by rural households, over half of this is due to rising energy costs, with home heating and fuel for cars being the biggest increase.
Earlier this month, The Journal reported that experts and advocates had called for more targeted welfare payments that would help ease the pressure on lower-income households.
There were calls for an additional increase to the Working Family Payment (WFP) in the package of measures announced by the Government.
In the 2022 Budget, an extra €10 was added to the WFP and was set to come into effect in June, but the measure was pushed forward to April.
Green Party TD, Neasa Hourigan had previously called for the thresholds for the WFP to be increased by 10% across the board.
To help tackle the cost of living on the households that are the worst impacted, the Central Bank has said that the Government should link additional supports to existing welfare schemes.
The Central Bank has also said that while energy price rises will slow down this year, the current levels of energy prices are likely to stay high in the medium term.
Measuring inflation
Currently, the main measure of inflation is done through the Central Statistics Office’s Consumer Price Index (CPI).
The index is a measure of the average prices of a range of goods and services and tracks how these prices change over time.
However, in recent weeks it has said that it will be considering whether or not the CPI reflects the sharp rise in the cost of living across all household types, particularly lower-income households.
Additional reporting by Ian Curran and Stephen McDermott
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