ESRI warns rents and cost of energy to continue rising

Pressures in the rental sector are likely to continue to grow for the next six to nine months, suggesting that rents will increase and properties will become harder to find for renters, researchers from the Economic and Social Research Institute (ESRI) told an Oireachtas committee on Wednesday night.

They also suggested that the cost of fuel and heating will continue to rise for the coming months during an engagement with the Oireachtas Committee on Budgetary Oversight on the topic of inflation.

“House-price inflation in August of this year is just under 11 per cent per annum. It should also be said that rental inflation is experiencing increases. With more and more people expected to return to urban areas as workplaces reopen, it is likely that rental pressures will continue to grow over the next six to nine months,” ERSI researchers Karina Dooley, Niall Farrell and Kieran McQuinn told the committee in an opening submission.

“In terms of energy pricing, international trends are likely to lead to sharp upward pressure on energy prices in Ireland. For gas and electricity, current information suggests that this will persist during winter 2021/22 and that prices may fall in spring 2022,” they said.

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Several TDs questioned the researchers on the impact of carbon tax increases on households, with Michael Healy-Rae, Richard Boyd-Barrett and others questioning the strategy of using carbon tax increases to promote decarbonisation and the use of renewable energy sources.

"I don't accept it changes behaviour," Mr Boyd-Barrett said. "Put it on the profits of Ryanair. on Larry Goodman and the big beef producers. Load it on as far as I'm concerned.

“But lower-income people are being punished when they’ve done nothing wrong,” Mr Boyd-Barrett said. “The rich emit far more carbon than the poor.”

Evidence

However, Prof Kieran McQuinn said that the “evidence says that carbon taxes are an effective way of changing behaviour”. There was a great deal of evidence to this effect, he said.

“If you want to change behaviour in this area then carbon taxes is the way to do that,” he said.

Prof McQuinn said that Ireland could emerge from the pandemic in a better fiscal position than before it due to “the strength and pace of our recovery”.

However, he said that while the ESRI had argued for greater capital investment in some areas such as housing in the coming years, “discipline” in current spending would have to be maintained in order to avoid overheating of the economy, which would further fuel inflation.