Our money is set to be worth less as the havoc of the Russian invasion of Ukraine continues to disrupt energy markets, according to an Economic and Social Research Institute report.
Irish punters have already seen major increases in energy bills and fuel costs and the war is also set to hit food prices.
Taoiseach Micheal Martin warned we are heading to a "war economy" which in this case means the price of pasta, bread and beer will soar.
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The ESRI quarterly report did note that there had been a strong recovery following the lifting of Covid restrictions and added that the unemployment rate is set to continue to drop.
However, the disruption to energy markets caused by the war will lead to a lower GDP.
A spokesperson for the ESRI said: "Russia’s invasion of Ukraine will have significant impacts on the global economy. Increases in consumer prices are likely to accelerate as the conflict disrupts energy markets.
"As a consequence of higher prices and greater uncertainty in global trade and investment, we expect GDP and MDD to be lower in 2022 than previously forecast."
Inflation had already begun to hit our pockets after the Covid restrictions were lifted and the Russian invasion is set to "intensify" the cuts to spending powers.
They said: "Inflationary pressures, which had already been mounting in the latter half of 2021 due to supply chain problems and a rapid recovery in consumption, is likely to intensify as a consequence of the invasion of Ukraine.
"Economic sanctions imposed on Russia and disruptions to supply are likely to persist and feed into consumer prices. Given these uncertainties, we now anticipate average inflation of 6.7 per cent in 2022 and 5.0 per cent in 2023."
However, the think-tank believes the unemployment rate will drop in the coming years.
They said: "Unemployment is set to average 6.3 per cent in 2022 and fall further throughout 2023. We expect unemployment to reach 4.5 per cent by Q4 2023 and average 4.8 per cent for the year."
Author of the report, Kieran McQuinn from the ESRI, said the outlook for the economy is still positive despite the challenges posed by the war.
He said: “While the outlook for the Irish economy is still positive in 2022 and 2023, the impact of the Russian invasion of the Ukraine will lower the expected growth rate of the Irish economy and lead to higher rates of domestic inflation.”
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