Rising alcohol prices are helping to inflate the inflation rate

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The minimum unit price (MUP) on alcohol is contributing to higher inflation this year, the finance ministry has admitted in documents which also warn that the government’s response to the cost of living crisis will hamper plans tax cuts and welfare increases in the Budget.

Jhe overall cost of alcoholic beverages has risen by almost 8% this year following the introduction of the MUP, which came into force at the start of the year and set a floor price of 10c per gram of alcohol.

This means that the cheapest can of lager is €1.70, a bottle of wine can be sold for no less than €7.40, and a 700ml bottle of whiskey or gin must be sold. at least €22.09.

“Minimum price for alcohol – introduced at the beginning of the year also contributes to the annual increase,” according to a briefing to coalition leaders and senior ministers in February.

The recently released documents were prepared by the Ministries of Finance and Public Expenditure before the war in Ukraine and described the evolution of inflation and the options to be considered before February 10. announcement a lump sum of €505 million to reduce the cost of living.

They have repeatedly warned that any measures announced should be temporary and not part of core spending, as this will affect measures in the 2023 budget.

The government last month announced an excise duty cut costing €320 million, bringing the cost to the public purse of the cost-of-living mitigation to €825 million in the first quarter 2022.

“Further permanent increases to base spending in 2022 would further reduce the amount available for measures in the 2023 budget,” said a briefing paper for the Cabinet Committee on Economic Recovery and Investment on Feb. 10.

The document also outlines some of the measures that were considered but ultimately not announced.

They included a student aid fund of 5 million euros, the abolition of state examination fees (cost of 10 million euros), a 50c reduction in prescription fees (cost of 18 million euros), the abolition of hospitalization costs (cost of 26 million euros) and the granting of an additional 3.4 million euros to St Vincent de Paul and Protestant Aid.

The document indicates that the measures in the areas of education, health and transport would have an annual cost of 200 million euros and that given the need to fund programs for survivors of mother and baby homes, and for owners affected by mica, it would “significantly reduce the ability to allocate funds to other program commitments for the government in the 2023 budget.”

A separate document prepared for the three coalition leaders said: “Fee reductions or waivers in 2022 would most likely create an expectation that such measures will continue into 2023 – if so, this would further reduce available spending. limited for any new measurement. in Budget 2023.”

Meanwhile, amid growing pressure to ease the cost of living, top sources in Ccoalition downplayed expectations of a new set of measures in the coming weeks.

“The situation is very fluid at the minute, so we cannot react on a weekly basis,” the senior source said.

Although Taoiseach Micheál Martin has said any new measures will be targeted at low-income households and families with children, it is understood that Tánaiste Leo Varadkar favors measures that are both targeted and universal.

Mr Varadkar told the Institute of International and European Affairs last month that increased spending should focus on reducing childcare and healthcare costs for families.

Meanwhile, Mr Varadkar and Finance Minister Paschal Donohoe are expected to deal with backbench discontent over a planned carbon tax hike next month.

Fine Gael TDs submitted a motion to the parliamentary party asking for the raise to be postponed.

But a senior Fine Gael source said the increase was required by law and any postponement would mean a double increase. at a later time.

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