THE public expenditure minister has said the Government recognises the serious impact that the rising level of inflation is having on people and on businesses.

Speaking to The Echo, Michael McGrath said that the Government has sought to respond in the best way that it can but said it also needs to be honest with people.

“There will be a price for all of us from this war [in Ukraine] and the Government cannot fully offset it,” he said.

“We don’t know how long this is going to last and how long the economic fallout will be but we do have to be careful that in responding to the current inflationary period that we don’t do anything to make the situation worse.

“So as a Government we are very shortly going to consider what the most appropriate budgetary stance is — as in how much money we need to make available — but we also have to be conscious that the cost of borrowing is increasing for the country as well and we need to manage the public finances in a responsible way to avoid getting into trouble in the future.

“There is a balance to be struck,” Mr McGrath said.

“We’ve done a lot so far and the priority in the short term is to continue to fund the measures that we’ve introduced such as reduced Vat rates, the reduction on excise, all those measures continue until the budget and then on the budget day we’ll make new decisions.

“We’re in the middle now of deciding what is the appropriate stance for the country in relation to that budget,” he added.

It comes as new research by Permanent TSB found that cost of living increases is now the dominant issue among consumers. The research found that 62% of people feel they will have to cut back on food spending over the coming year in response to sharp price rises, while 53% of people fear they will be unable to pay higher energy bills.

Other key findings revealed that 85% of consumers worry the cost of living is going to get much worse over the next 12 months. Three fifths (61%) describe themselves as “just getting by” financially, while 58% feel confident managing day-to-day expenses (22% do not).