Targeted and temporary measures should be used to tackle rising inflation, a senior European Central Bank official has warned.
Hilip Lane, the European Central Bank’s chief economist, acknowledged that people were experiencing a significant increase in the cost of living but said he believes inflation will fall later this year.
A study by the Economic and Social Research Institute (ESRI) released on Wednesday said inflation could reach 6.7 percent this year, a level not seen in Ireland for decades.
The Irish economist said: “We should acknowledge that these extraordinary times mean there is a lot of uncertainty.
“The inflation rate will start to fall in the second half of the year.
“We have the inflation rate for the entire euro area this year at 5.1 percent.
“It will be above that number.
“Now it’s above that number.
“I think it will be above that number for the next few months.
“But we think it’s going to start coming down.”
Inflation has dominated the political agenda in the country and Europe in recent weeks as rising prices have stoked fears of a deepening cost of living crisis.
Sinn Fein has urged the government to keep moving to protect households from inflation, despite a range of measures to support households and businesses.
Mr Lane said the situation should stabilise, pointing out that he did not foresee the kind of long-term witnesses to inflation in the 1970s.
“This price increase that we are seeing now is real.
“It’s a very big economic event and it’s hurting a lot of people.
“And I’m not telling you that we think it will reverse.
“But we think the momentum will slow down.
“There was this surprise inflation.
“People have seen their living standards drop.
“And that absolutely has to play a role in collective bargaining,” he told RTE radio.
“But there’s a difference between that and saying we’re in a period of high inflation like the 1970s.”
Mr Lane said the European Central Bank sees targeted action as a key tool in the fight against inflation.
“For those on lower incomes, there is no savings to fall back on.
“They will reduce their consumption, which will hurt the economy.”
“Targeted and temporary are our core messages from an economic point of view.”
https://www.independent.ie/business/personal-finance/it-is-hurting-a-lot-of-people-economist-philip-lane-calls-for-targeted-measures-to-tackle-rocketing-inflation-41490205.html “It hurts a lot of people” – economist Philip Lane calls for targeted measures to combat skyrocketing inflation