Households are in line for the biggest drop in living standards in more than a decade, according to the Central Bank.
The regulator is warning rising prices will hit disposable incomes, which it expects to fall by an average of just over 3 per cent in 2022.
It is forecasting inflation to top 10 per cent this year, and average at 7.8 per cent, but expects that to fall to 4.2 per cent next year.
However, Deputy Governor at the Central Bank, Mark Cassidy, said the war in Ukraine means there are a lot of uncertainties with that.
Mr Cassidy told Newstalk: "For June, the household inflation rate is currently running around 9.5 per cent, that's the highest rate in 40 years.
"We expect there might be some further modest increase in the coming months, so we think the average inflation rate this year will be around 7.8 per cent, falling to just over 4 per cent next year and 2.1 per cent in 2023."
War in Ukraine
He added: "Very important, I would emphasise there is very considerable uncertainty around those forecasts, particularly relating to events in Ukraine."
A staggering 71 million more people around the world are experiencing poverty as a result of soaring food and energy prices that climbed in the weeks following Russia’s invasion of Ukraine, according to a UN report.
The United Nations Development Programme (UNDP) estimates that 51.6 million more people fell into poverty in the first three months after the war, living off 1.90 dollars a day or less.
This pushed the total number globally at this threshold to 9 per cent of the world’s population.
An additional 20 million people slipped to the poverty line of 3.20 dollars a day.