Irish households will have more money to spend as the rate of inflation looks set to decrease this year.
That’s according to Conor O’Toole, an Associate Research Professor at the Economic and Social Research Institute, who spoke about their projections for 2023.
Although inflation will remain higher for longer, domestic demand will remain robust this year, their findings have suggested.
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Speaking to Newstalk this morning Mr O’Toole said: "The best way to contextualise it is that relative to where we previously saw inflation, we do see it coming down somewhat - this year relative to our previous expectations.
"So, at the end of 2022 we really saw quite a high inflation rate up over 7 per cent which was going to be incredibly challenging for many, many households.
"However, there have been developments in the energy markets in particular over the last couple of months that lead us to believe that the inflation rate won’t be as high as that for this year.
"We’re looking at an inflation rate at around 4.5 per cent for this year. You know there are a couple of implications that will lead into much more robust domestic demand than we had previously expected."
In line with these latest findings, O’Toole says: "We’ve upgraded our forecasts around that. You know, households are going to have more money to spend on goods and services, and that is probably going to give a little bit more security on the domestic side to businesses to invest."
Despite this, Mr O’Toole reiterated: "We still expect prices to rise notably this year, and the levels have gone up quite considerably for the past number of years which is very challenging for many many households.
"But that said, we are downgrading the inflation rate forecast, so the rate of growth is expected to be less than it was last year."
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