Consumers expect prices to rise 10 percent this year

MOST people expect prices to continue rising this year, with an expected increase of about 10 percent.

But half of the workforce does not expect wage increases this year to compensate for the rapid rise in prices, according to central bank research.

It comes as inflation hit a nearly 40-year record of 8.2 percent in May.

Energy, fuel and food prices are also skyrocketing, putting massive pressure on household budgets.

And Taoiseach Micheál Martin warned of higher energy prices this week after a move to tighten EU sanctions on the use of Russian oil.

Survey data in a central bank research report showed that consumers expect inflation to be around 10 percent this year.

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However, half of those in employment in Germany expect their income to remain the same over the next 12 months.

Just over a third expect their wages to rise slightly over the next year.

And the majority of those expecting rising earnings believe earnings will grow less than consumer prices next year.

Increases in utility costs are likely to be reflected in consumer prices now and in the coming quarters, according to a second central bank research paper.

She notes that there is limited room for many companies to adjust labor costs or profits to respond to these increases.

About 83 percent of respondents expect prices to rise at a faster or the same rate in the coming year, according to A Snapshot into Inflation and Earnings Expectations by Irish Residents, written by Kevin Cunningham, Garo Garabedian and Civil Zekaite, and survey data from Ireland Thinks.

In March, the expected average inflation rate for next year was 9 percent.

But this had risen to 10 percent in April.

The responses also point to growing concerns about the cost of living for Irish residents.

But large parts of the working population do not expect their incomes to increase to finance higher household costs.

Between February and March, most respondents lowered their expectations for higher wages.

Women were generally less optimistic than men when it came to a pay rise.

The wage expectations of male respondents fell significantly between February and April, but remained higher overall than those of women.

Of those who expect their income to increase in the coming year, the vast majority expect this increase to be less than consumer price increases.

This means that most working Irish residents expect their real income to fall over the next 12 months.

Only a quarter of those surveyed said they had requested a raise from their employer.

But a majority had not actively called for higher wages to compensate for the cost of living.

The recent increase in input costs as a result of supply chain bottlenecks and the war in Ukraine is now reflected in consumer prices and is expected to do so next year, the central bank said.

Inflation rose faster in Ireland than in the rest of the eurozone in May and is now above the eurozone average, according to KBC Bank economist Austin Hughes.

That Irish Independent reported last week that new childcare subsidies and public transport fare reductions are expected to be cornerstones of a new living expenses package for next year’s budget.

The 2023 budget also targets lower healthcare costs at both the hospital and pharmacy levels, and there is a determination to reduce the cost of higher education. Consumers expect prices to rise 10 percent this year

Fry Electronics Team

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