Tánaiste warns that inflation could “continue for years”.

Tánaiste Leo Varadkar has called for a “comprehensive anti-inflation strategy” to deal with rising prices which he says could “continue for years”.

The strategy should include tax indexation, childcare subsidies, a “substantial” welfare and pension package, reduced insurance costs and more social and low-cost rental housing.

“I believe that the increase in inflation is not temporary,” he told the National Economic Dialogue. “It can go on like this for years. It’s going to be moderate, slow, but I don’t see a return to very low inflation anytime soon.

“Governments can do more by helping to lower some of the underlying high costs that the Irish are bearing.”

But he said there was “a limit” to what the government could do to offset rising energy costs.

Finance Minister Paschal Donohoe pointed to risks to economic growth as the government grapples with next year’s budget.

“So many of the risks that we identified as potential a few months ago are now the ones that are materializing and that we need to deal with,” Mr Donohoe said earlier at the same event in Dublin Castle.

In April, the government forecast the domestic economy would grow 4.2 percent this year and 3.9 percent in 2023, while gross domestic product would grow 6.4 percent this year and 4.4 percent in 2023 .

Both the European Commission and the OECD have since lowered their forecasts, coming in below the government’s April estimate.

While Mr Donohoe said the government “would not stand by as these types of risks develop,” he insisted spending must be reined in to maintain the country’s creditworthiness when borrowing costs start to rise.

“We can help, but we cannot face and isolate ourselves from the changes that are happening, and we have constraints and limitations in the choices we must make.

“The era of Covid where we could borrow so much for so little – that’s over now.”

The government expects a small budget deficit this year and a small surplus in 2023.

The Taoiseach also dampened expectations of a budget giveaway, insisting the government would not chase inflation “month-to-month.”

Micheál Martin insisted that the upcoming budget will be a “cost of living budget” and warned that next winter “could be the most significant difficult time of this crisis so far”.

He said the government must prioritize the people most vulnerable to price increases and be careful not to inflate the cost of living by injecting too much money into the economy.

“Our priority will be to balance the rising cost of living against the risk of exacerbating the same inflationary pressures.”

He also brushed off questions about putting corporate tax revenue into a hard times fund, saying the “immediate priority of this year’s budget will be the cost of living”.

The National Economic Dialogue is an important step in the budget process. The summer economic statement will follow next month.