Irish consumers should brace themselves for price surges as high as 10% on a host of goods and services for the next three years, a leading economist has warned.

As the war in Ukraine continues to disrupt supply chains worldwide, AIB’s chief economist Oliver Mangan said that people can expect a hit to their disposable income "before too long", with wages not expected to rise enough to match the rate of inflation.

"We could see inflation rates of 8% or 9% before too long," he said. "High prices are here to stay, this year and next year. We are looking at three years of high inflation. You would have been carted out of a room in a white coat if you had predicted that a couple of years ago.

"Wage growth is not going to keep track with the spike in inflation. That is going to depress economic activity. The uncertainty this brings will impact investment activity."

The dire warning comes as soaring mortgage rates are adding over €2,200 a year to cost of living in Ireland in comparison with our European neighbours, with latest jump of 0.07% between December and January being the biggest monthly increase in almost five years.

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The rate is rising because homeowners are opting for more expensive fixed-rate loans – fearing that interest rates are about to rise across Europe – according to new data from the Central Bank of Ireland.

According to the Banking and Payments Federation Ireland, in December the average first-time buyer mortgage in Ireland is around €262,000. This means someone borrowing this amount over 30 years is paying almost €187 extra a month, or over €2,200 a year, compared to our European neighbours.

The jump in interest rates between December and January means that on an average €262,000 mortgage being repaid over 30 years, payments would have gone up from €1,056.78 to €1,066.22 – an increase of €113 over the year.

Rachel McGovern, director of financial services at Brokers Ireland, warned that the window of opportunity to avail of the best mortgage rates may be closing.

Rapidly rising inflation has led to talk of an increase in interest rates by the ECB over the coming months to help tame it. However, the war between Russia and Ukraine could push inflation and interest rates higher.

The latest figures from the Consumer Price Index, in the 12 months up to January this year, shows that inflation is running at 5% but for food staples such as bread it has risen by 7%.

One of the knock-on impacts of the war and the subsequent sanctions on Russia is on staples such as wheat for flour and in turn bread. Russia and Ukraine supply 30% of the world’s wheat.

President of the Irish Bakery Association, Tony Kane, warned that the price increases on bread are "inevitable" because the industry is "fighting for survival."

In April last, an 800g Brennan’s Sliced White Pan would cost €1.65, an 800g Irish Pride Slice Plan cost €1.69 and an 800g Pat the Baker Sliced Pan cost €1.59. As of yesterday, all these loaves of bread cost €1.75, €1.85 and €1.75 respectively.

Mr Kane said: "The bakery sector is really fighting for survival at this stage with the triple whammies of flour and ingredients along with the fuels, everything else freight and packaging. And of course, the unavailability of staff as well. It’s all coming into a tsunami for price increases on flour and bread in the Irish market.

"It’s absolute mayhem. We had a committee meeting of the Irish Bakery Association last week and it was 100% towards rising costs and challenges that are facing us. We’re fighting for survival," he told RTÉ Radio One.

Mr Kane said it may be worth "looking at again" bread subsidies like we had in the 1960s and 1970s but if he was to ask the Government for anything it would be "support for the bakery industry" such as granting work permits for bakers.

He added Irish wheat is not really suitable for the production of the common loaf, so getting farmers to grow more wheat won’t do much good for bread prices. "90% of our flour is imported from continental Europe. That’s under pressure now," he said.

Dermot Walsh of Walsh’s Bakehouse in Waterford city, which produces the famous blaa bread roll, explained that Irish wheat is not suitable for regular bread because it hasn’t got a high enough concentration of protein. "We do not get enough sunshine to allow the wheat to produce protein levels that are suitable for commercial bread making. Certain sourdough guys can use it because it is a different kind of product.

"For smaller bakers like myself, the cost has gone from around €500 [per metric tonne] in July 2021 to just under €800 now. That has to translate into, whether we like it or not, higher prices just on the flour alone."

Farmers said they were disappointed that there were "no proposals" to increase capacity to produce food following a meeting with Agriculture Minister Charlie McConalogue on Tuesday.

The Irish Farmers Association had called for help tackling input costs such as fuel, fertiliser and feed. However, in a statement after the meeting, IFA president Tim Cullinane said that the minister came to the meeting with no proposals. Waste company Panda Ireland has announced that it would be adding an additional €1 per bin charge to its customers in what it called a "fuel and energy surcharge". In early February, Bord Na Móna said it was increasing its bin collection charges by €2 per bin due to increases in fuel costs.