The 9% VAT rate for hospitality ends today, increasing to 13.5%.
The hike will affect prices in restaurants, hairdressers and hotels.
The cost of living crisis is set to worsen as the price of diesel goes up by 5c and petrol by 7c in excise duty on Friday.
Economist Jim Power has said the increases will affect the cost of living.
"These are measures that are being implemented by Government, and they are going to add significantly to the cost of living," he said.
"Unfortunately, these increases are coming on top of pre-existing price pressures.
"We've seen, because of international developments, the price of energy rising in recent weeks.
"That's already being reflected in more expensive petrol and diesel at the petrol pumps."
Mr Power believes the surge in fuel costs should have been postponed.
"The increase in the VAT rate on September 1st should have been postponed," he said.
"There's nothing forcing Government to increase both of those taxes.
"In the budget, I would expect to see money being directed at the poor sections of society to help them deal with the cost of living crisis that's out there," he added.
Reporting by: Lynsey Dolan
