As the Minister for Public Expenditure and Reform will know, the Economic and Social Research Institute, ESRI, published its quarterly report this morning. It makes for very alarming reading. The ESRI says inflation could peak at 8.5% this summer before averaging out at 6.7% for the year as a whole. This, as the Minister knows, is the highest annual rate of inflation since 1984. Inflationary pressures that were already building have escalated further due to Russia's criminal invasion of Ukraine. We are presented with a very serious situation for workers and families as households that struggle to keep their heads above water now face a prolonged cost-of-living crisis. As the Minister knows, everything is going up and even now the very basics are pushed beyond the reach of many ordinary people. Our airwaves are filled with people sharing their stories of how incredibly difficult it is just to make ends meet. People can barely afford to light and heat their homes and we now need to talk about food. The soaring cost of energy and fuel, problems with supply chains and the impact of this criminal war mean the price of groceries is going through the roof. Families now in real terms are stretched to put food on the table and money does not go far when it comes to the weekly shop. People are down the bare essentials and have very little left at the end of the week. They will be very worried and alarmed hearing the news this morning.

The ESRI is projecting strong economic growth and a budget surplus this year. That is the good news. The Government therefore has elbowroom within the public finances to intervene and cushion people from the sharpest impact of this crisis. We must ensure workers, families and small businesses come through this crisis in one piece. We must ensure especially that people on low and fixed incomes have enough to live on. The Government cannot stand idly by while people are pushed into poverty. Its members are not observers or commentators on people's hardship. Their job, as the Minister knows, is to respond with speed and urgency to the extraordinary difficulties households now face. However, the Minister's colleague, the Minister for Finance, Deputy Donohoe, has said the Government has no plan to intervene with cost-of-living supports until October's budget. He said: "I can be really clear that we are not considering any further steps." Does the Minister for Public Expenditure and Reform agree with the Minister for Finance's position because October is seven months away and people are trying to stay afloat now? They cannot wait that long for Government to implement measures that will bring the cost of living down.

Tá sé geallta ag tuairisc an ESRI go mbeidh an ráta boilscithe i mbliana mar an ceann is airde ó 1984. Ní féidir le hoibrithe agus teaghlaigh dul tríd an ngéarchéim costais mhaireachtála seo. Tá an cumas airgeadais ag an Rialtas déileáil leis seo so caithfidh sé gníomhú anois. I accept the Minister cannot do everything. There is no expectation of that on him or on the Government but they must do more. The Government has to cut the cost of energy and fuel. It will need to go further than that but it needs to start there. I asked the Tánaiste yesterday and now ask the Minister to engage with the EU Commission to remove VAT from energy bills for an initial three-month period and remove excise from home heating oil. These are two initial actions the Government can take to give workers and families the break and the breathing room they desperately need.

I thank Deputy McDonald for raising the issue of inflation and the cost-of-living pressures we as a Government acknowledge people are facing at this time. It was highlighted further by the ESRI report the Deputy mentioned in her introductory remarks.

People will accept this is a global phenomenon. All developed economies in the world are experiencing a high level of inflation. For our neighbours in the UK, the latest figure is 6.2%. In the US it is just under 8%. These are unprecedented times. The level of inflation we are witnessing and that people are having to deal with in their day-to-day lives is without parallel in recent modern history. That is why the Government is not standing idly by. The Government is not an observer or commentator. The Deputy is correct on that. It has already taken very significant steps in an effort to alleviate the burden people are undoubtedly facing at this time. That started with the budget back in October where we had a package of over €1 billion in income tax reductions including for people on low and middle incomes and also welfare increases both in core social welfare weekly rates but also targeted, anti-poverty measures such as the living alone allowance, the qualified child dependant allowance, changes to the working family payment and so on. However, it is because of what has happened since that we recognise we had to go further and the Government has responded outside of the normal budgetary calendar with two further significant interventions in recent weeks.

As the Deputy knows, back in February we had the package of over €500 million. This included the energy credit of €200 for every household which will be applied to electricity accounts in the next number of weeks. There was also the fuel allowance lump sum of €125 for up to 400,000 households, along with a range of other measures, including the reduction in the drugs payment scheme threshold to €80, the front-loading of the budgetary changes in the working family payment, a 20% reduction in transport fees and improvements in the school transport scheme as well to try to help families deal with the current pressures. The Minister, Deputy Donohoe, in the last two weeks brought forward the reduction in excise on petrol and diesel in recognition of the extraordinary increases in prices people are experiencing at the forecourts in recent weeks. The Government has made a genuine and concerted effort to tackle this issue. That overall cost-of-living package is close to €2 billion at this time.

In the next number of weeks, led by the Minister, Deputy Donohoe, the stability programme update will be published by Government. This will reset our economic and fiscal forecasts to take account of the prevailing conditions we are experiencing. We are witnessing a perfect storm in relation to inflation. Inflation was increasing coming out of the worst effects of Covid internationally and that has now been compounded by the impact of the Russian invasion of Ukraine. I assure the Deputy the Government is as one. The Minister, Deputy Donohoe, I and the entire Government collectively are at one in our determination to assist and support people at this time. That is why we have already taken a number of critical decisions. At this point we have no immediate further plans to introduce additional measures but as is always the case the Government will keep this issue under review.

I acknowledge what Deputy McDonald said on VAT. I am sure she will accept we are governed by an EU VAT directive. The member states' national laws on VAT have to be consistent with that directive. The Taoiseach and the Minister, Deputy Donohoe, are directly engaging with Commission President von der Leyen and her colleagues to see what flexibility there may be on options available to member states. We expect to hear back from the Commission in that regard shortly.

That is an extraordinary response and a very disappointing one. When the Minister says the Government is at one on these matters I can only assume he is therefore reiterating the position of the Minister for Finance that the Government has no plans to take further measures this side of October. Whereas the State's economic and fiscal forecast needs to be reset this springtime, I tell the Minister households' economic and fiscal realities have taken a battering. It is simply unreal and not accepting of the reality of the soaring inflation crisis to suggest the Government will sit this out for the next number of weeks and months. That is not dealing with the reality. I appeal to him again to move on this. We accept the phenomenon is global. The Minister does not have to keep repeating that. Nobody is placing the origins of this crisis at the Minister's feet - far from it. However, there is an absolute immediate expectation the Government will act now and not wait until October. That is not real. Will the Minister move on the issue of VAT and of removing excise from home heating oil? Will he move on them now and give people some small breathing space?

Through our actions to date, we have demonstrated that the Government is agile and responsive. The Government is constantly monitoring the evolving situation. We are experiencing an incredible amount of volatility and the Government has responded to date. We will keep the situation under review and consider our options on an ongoing basis. However, we also have to be honest with people and say that we as a Government cannot fully insulate the economy, households and businesses from the economic fallout of the appalling war in Ukraine.

That is not what the Government is being asked to do. The Minister is being disingenuous.

It would be disingenuous to suggest that we could.

No, the Minister is being disingenuous.

We have already taken decisive steps and we will keep the situation under review-----

Until October.

-----but we also need consistency from Deputy McDonald. She entered the House yesterday and called for the removal of VAT. On the very same day, Sinn Féin tabled a motion in the Dáil calling for a reduction in VAT. It is fine in opposition to be loose in one's language and suggest that the Government can do things that it cannot, but the Deputy knows well that the Government does not have within its armoury at this point in time the ability to reduce or remove VAT. She should be honest with people and not mislead them about the options open to the Government.

I have been asking the Government to deal with this with the Commission for months. I am familiar with the directives.