Chair of the Irish Fiscal Advisory Council Sebastian Barnes has said inflation is likely to be at around 7% when figures are released today and will probably peak at about 8% in the summer but is expected to go back down to 3% next year.
The Central Statistics Office is due to publish inflation figures for March later this morning.
The inflation rate was running at 5.6% in February, up from 5% in January.
Sebastian Barnes told RTÉ’s Morning Ireland that prices will continue to rise at “an unusually high rate”.
“We expect the costs will continue to rise and it will rise on a much broader range of products, so it won’t just be these big increases in electricity or in petrol prices. It will be more broadly based,” he said.
“It will show up more in things like food and other parts of the economy, but they will still be rising at an unusually high rate,” Mr Barnes added.
The key factor is energy prices, he said, due to disruption of supplies from Russia and it will take a while to find an alternative supply.
“It’s going to take a long time for the economy to adapt, for us to find other sources to cut back on our use of energy”, he said.
The same applies if the supply of gas is cut off, which will lead to a “second wave” of inflation, he said.
The Government can take temporary measures to offset the rising costs, he said, especially targeted to those on lower incomes.
Mr Barnes said the Government can take measures to “smooth over this sort of very abrupt change in prices” and can help the most vulnerable people.
“Ultimately wages are likely to rise as well,” he added.
But Mr Barnes cautioned that there is a limit to how much any of these things can shield us from the impact of rising inflation.
He said there could be a package around the carbon tax and measures more targeted to lower income households, such as measures linked to the benefit system, fuel allowance, benefits, and tax.
The Government does have the scope to borrow more money, he said.
“But what we can’t do is borrow permanently on a massive scale to insulate ourselves from these changes,” he cautioned.