More price rises on the way later this year - ESRI

The Economic and Social Research Institute (ESRI) has issued a warning about escalating prices, predicting higher grocery bills in the autumn and winter. This forecast stems from "second-round effects" of increased energy costs, with a typical nine-month lag observed between fuel and food price hikes.

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International headwinds are strong; fossil fuel prices remain elevated, and uncertainty remains around the conflict in the Middle East.

The ESRI has consequently revised its inflation forecasts upward, now expecting 3.7% for 2026 and 3.1% for 2027. The institute also noted that lower and middle-income households might need temporary, targeted support to navigate these rising costs.

Despite these concerns, the ESRI has upgraded its economic growth forecast to 2.6% for 2026. This revision is attributed to stronger-than-expected investment, particularly in housing and technology equipment related to artificial intelligence and data centers.

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These higher prices are likely to raise consumer prices in Ireland this year and next to a greater extent than previously anticipated.

However, the report highlights ongoing "international headwinds," including elevated fossil fuel prices and Middle East conflict uncertainty, which are expected to contribute to higher consumer prices in Ireland. The ESRI also criticized the government's previous fuel support package as "poorly targeted" and "disappointing."

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In that context, it is important that the upcoming public sector pay talks are based on a clear understanding of the public finances vulnerabilities.