The Government has been urged to take "emergency" steps to cut VAT rates and increase social protection payments if it wants to address the growing cost of living crisis.

The Consumers Association of Ireland called for the measures to be taken as soon as possible after highlighting surging daily costs for people and warning Ireland is facing the highest rate of inflation in two decades.

Speaking on RTÉ's News At One programme, the CAI's policy and council advisor Dermott Jewell said the current predictions for rising costs across a range of areas are "staggering".

Noting a 21-year inflation high, a likely €500-700 rise in energy prices this year, a 5% rise in most daily groceries since January 2021 and a 33% rise in petrol and diesel costs over the past year, he said emergency steps need to be taken now.

"It's not to say that we haven't to some degree been here before, but the levels of increase are staggering.

"We're looking at an average household taking on an increase of between €500 to €700 in energy costs. This is just to keep themselves able to cook, or able to have some heat or warmth in the home.

"The basic basket of bread, milk, tea, coffee, butter is at an increased level now of between 4% and 5%.

"For an individual living alone on a low income or a pension, that has almost completely eradicated the €5 increase they will have received. It's a real problem," Mr Jewell said.

While acknowledging the issues cannot be resolved easily, Mr Jewell said the Government should consider emergency steps in the coming weeks to address the situation.

He said these should include short-term cuts to VAT in the same way as VAT was cut for the hospitality sector during the worst stages of Covid-19, and "consideration" to time-limited increases to social protection payments.

"There are potentially two areas that Government could look at. Every element of cost that we're speaking about, whether it's an energy bill, a fuel bill, a food bill includes VAT.

"A reduction in VAT for a period of time would help enormously.

"The second element that we think really does need to be looked at is some form of a consideration for an interim review of welfare payments.

"The €5, it's always appreciated, but it's a fixed figure, this needs to be looked at as a percentage, because everything is increasing in phenomenal percentages and it's just not enough," Mr Jewell said.


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Speaking on the same programme Tricia Keilthy, the Society of St Vincent de Paul's head of social justice policy, also said changes are needed - warning people are already struggling with existing costs.

"When money is tight you notice every time something gets more expensive, particularly when it's essential items that you really can't do without.

"Those on the lowest incomes literally have no slack in their budget for cost increases, so they're left with the choice of cutting back or going without.

"In 2021 we took over 191,000 requests for help.

"We're seeing the impact on multiple fronts but the main areas we're seeing it really is in relation to energy, we've seen huge price increases.

"We saw a 24% increase in calls for help with gas and electricity, many people also have energy debt from the Covid-19 restrictions so when people were on reduced incomes or at home more with higher usage, many people got bill shock, so we literally have people who are sitting at home in the cold and the dark," she said.

Cost of living issues are becoming an increasing significant discussion in Ireland, with the Central Bank confirming Ireland has witnessed inflation rises for each of the past 14 months - and that our 5.5% year-on-year inflation rate is the highest in 21 years.

The Commission for Regulation of Utilities also says energy prices - which have already risen 27% in a year - are likely to rise another €500-700 in 2021.

In addition, due to Central Statistics Office figures showing a year on year 5% rise in daily groceries; Dublin's rent prices now being 40% higher than during the Celtic Tiger boom; and AA Ireland saying diesel and petrol costs have risen by a third in a year, groups are predicting average household costs could rise by more than €1,500 throughout 2022.