The Minister for Public Expenditure and Reform has said we need a coordinated response from the European Union to rising inflation rates.
Michael McGrath said the figures are exceptional and reflect the unprecedented times that we are living through.
"We are seeing levels of inflation that would have been unimaginable just a short time ago, with some eurozone countries well north of 10%," he told RTE News at the Institute of Directors spring lunch in Dublin.
"The scale of this problem is beyond the capacity and ability of any single member state. We are going to need the European Union in a coordinated way to lead a significant policy response to what is a major threat to our economies and indeed our societies and the well-being of our citizens."
He said the Government has already made a number of budgetary interventions totalling euro800m outside of the normal budgetary cycle and it continues to keep the situation under active review.
He added that clarification had been sought from the European Commission about securing extra flexibilities around VAT and the application of VAT to fuel and household bills.
"But I do think we need to be honest with people, the scale of what we are dealing with here is beyond what could have been imagined and it is not possible for any Government anywhere in Europe, acting on their own, to fully offset the increase in costs that are directly associated with the war in Ukraine," he added.
"And that is why it is so important that an EU level we see a coherent and coordinated policy initiative now, using all of the levers that are available to them."
He said the EU VAT Directive and Energy Tax Directive mean the scope for Ireland to make changes to VAT is extremely limited and wouldn't have a material impact on the inflation people are experiencing.
In relation to energy security, he said even though Ireland is not directly dependent on Russian gas, a scenario where it were to be cut off would have consequences far beyond the countries that immediately rely on that supply.
"It is a serious concern, we don't know if this is a threat that is not going to be implemented, it hasn't been fulfilled or implemented yet," he said.
But he added that if it were it would have serious disruption across the EU in relation to the security of supply of gas.
That is why, he said, it is so important the Ireland and the EU accelerate efforts to reduce dependency on fossil fuels.
"But there is a limit to the speed to which you can implement that kind of profound change," he stated.
Addressing the audience of 300 business people at the Institute of Directors spring lunch, Michael McGrath said the truth is we will run out of conventional emergency accommodation, such as hotel rooms, for Ukranian citizens arriving in Ireland after fleeing the war.
He warned there is "some way to go" around the situation, it is going to get very difficult and it is going to challenge us.
But he said the Government will lead from the front and do all that it possibly can to provide the necessary supports to the people of Ukraine, including through social welfare, access to healthcare and schools.
Though he added that it may not be of a standard that we would like to provide, or we as a country would like to give.
He said this is a war we cannot be politically neutral on because it is an attack on the free world and our shared values, including freedom of speech, expression, human rights and democracy itself.
Mr McGrath said there will also be a very significant impact from the war in Ukraine, as demonstrated in the latest inflation rates.
He said businesses are experiencing a rapid escalation in costs and that is putting a strain on many walks of Irish life.
He added that the situation will mean lower growth in the Irish economy, although it will continue to grow, albeit at a slower rate than would have been the case had the war not taken place.
The inflationary impact will be substantial and will not be short lived he claimed.
In relation to the pandemic, the minister said he does believe that the peak of the current wave of Covid is now behind us and we seem to be on a downward trajectory.
The state had spent euro30bn on supports during the pandemic, he said, and this had been proven to be the appropriate response.
