There is an urgent need to focus on the diversification of energy sources

The National Competitiveness and Productivity Board said there was an “urgent focus” on projects to diversify Ireland’s energy sources and upgrade our electricity infrastructure.

In a bulletin entitled “Inflation and the Competitiveness of Irish Business”, the Council notes that Ireland is experiencing inflation at a rate not seen for 20 years and that half of this is due to the rise in the prices of energy.

It says the private and public sectors must both “proactively manage their cost base and drive efficiency” to create “a virtuous circle between cost of living, salary expectations and cost competitiveness”. .

He says it is vital that Ireland protects past productivity gains and tackles “…abnormally high costs…wherever they come from”.

It indicates that given the high level of uncertainty, there is a risk that inflation will increase.

The Council refers to the Ministry of Finance’s severe case scenario outlined in the recent stability program update that if energy prices were to rise further, inflation could average 8, 2% this year.

It also warns that any possible easing of price pressures later this year would more likely lead to a slowing in the rate of growth than any reversal of price increases that have already taken place.

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