A 'spectacular series of price hikes mean that every household will face rising costs for the rest of the year, the Governor of the Central Bank warned.

Inflation has risen at its fastest rate in more than 20 years - climbing by an average of 5.5% last year - and it is predicted to rise further in the coming months, before it falls towards the end of the year.

Groceries, petrol, diesel, rent and home-heating bills have all increased due to worldwide factors, including the pandemic, Brexit and global supply issues.

This has led consumers to pay at least hundreds, if not several thousands, more euro than they did last year. And it is expected to be March before households will see a small reprieve, with a proposed €100 Government subsidy to help with rising energy bills, due to come before Cabinet today.

The subsidy will be paid directly to energy suppliers as part of a plan aimed at reducing household costs this winter.

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It is hoped that the legislation will be introduced in the second week of February and passed by the end of the month.

Central Bank Governor Gabriel Makhlouf (pictured) described the hikes in energy prices as "spectacular" and while he thinks inflation will ease it is not expected to decline for at least another 12 months.

The sharpest rises in recent times were in energy bills, which hit the elderly, people on lower incomes and those living in older and rural houses the hardest as they struggle to heat their homes in winter.

In the past year alone, there have been more than 35 price hike announcements in the energy market.

In a speech to the Institute of Directors, Mr Makhlouf said: "This inflation is not experienced equally across households. People on lower incomes are especially affected by rising energy and rents. Transport, housing and energy have been the main drivers, although some increase has been evident across most parts of the consumption basket.

"Having reached highs of 5% in December, inflation across the euro area is expected to remain elevated in the near term. We expect it to remain above 2% for most of this year but our forecasts project it to settle below our 2% target in 2023 and 2024."

Mr Makhlouf spoke as new Automobile Association research shows that petrol pump prices "remain close to the highest levels ever recorded".

The average national price for a litre of petrol is currently 170.3 cent, while diesel stands at 160.5 cent.

A year ago, the average price of fuel stood at 129.9 cent for petrol and 120.8 cent for diesel, according to an AA Ireland survey.

The Consumers' Association of Ireland also warned that inflationary pressures are going to put a big dent in household finances this year. As well as rising energy prices, inflation is being driven by Brexit-related factors and supply chain bottlenecks due to Covid, said Daragh Cassidy of utility switching site Bonkers.ie.

Mr Makhlouf stated: Common to all economies around the world are higher energy prices which have driven much of the recent inflation."