Ireland's latest minimum-wage hike nudges prices but leaves overall inflation unchanged

A new study by the Economic and Social Research Institute examined all Irish minimum-wage adjustments since 2015. It concluded that seven of the eight increases had negligible impact on overall inflation, reflecting the modest share of minimum-wage earners in the national wage bill (about 2.7%). The 2024 rise, the biggest to date—12.4% from €11.30 to €12.70 per hour—correlated with a 2.5% price increase in specific categories such as hairdressing, takeaway coffee, and restaurant meals, which together account for 11% of total consumer expenditure.

By contrast, VAT increases for hospitality in 2019 and 2023 produced price hikes up to four times larger and were passed on immediately. The report also linked a sharp price jump in mid-2020 to pent-up demand and higher costs from PPE and staffing limits after COVID-19 restrictions eased. SMEs have complained that the wage rise, combined with higher energy costs and other statutory obligations, is squeezing margins. Overall, the institute argues that modest wage hikes are unlikely to drive inflation, with other policy measures having far greater price effects.