Irish inflation at 9.6% as euro zone prices surge

Prices in Ireland rose an estimated 9.6 per cent in the year to July, higher than the euro zone average, according to a flash estimate from Eurostat, the statistical office of the European Union.

Eurostat estimated that Ireland’s harmonised index of consumer prices (HICP) measure of inflation rose an estimated 0.4 per cent in the month of July. However, the annual rate of inflation remain unchanged from June at 9.6 per cent.

The estimates are subject to revision when the figures are finalised next month. But should the 9.6 per cent estimate be affirmed, July would be the first month in which the price index did not increase month to month since the start of 2022.

The HICP is a separate measure from the consumer price index (CPI) produced on a monthly basis by the Central Statistics Office (CSO). The latest CPI indicated that prices rose 9.1 per cent in the year to June, with the July data set to be published next month.

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Euro zone annual inflation is expected to be 8.9 per cent in July 2022, up from 8.6 per cent in June, Eurostat said on Friday, another all-time high and largely ahead of economists’ expectations, heaping pressure on European Central Bank policymakers to continue to tighten monetary policy over the coming months.

Frankfurt raised policy interest rates last week for the first time in almost a decade in a bid to cool red-hot inflation across the single currency area.

While ahead of the euro zone average, Ireland’s annual HICP rate for July is in the middle of the euro zone pack, the CSO said in a statement. Eight of 19 euro zone countries had a lower annual increase than the estimate of 9.6 per cent for Ireland while 10 countries had higher rates. Estonia had the highest estimated annual inflation at 22.7 per cent while Malta had the lowest at 6.5 per cent.

Commenting on the Eurostat release, CSO statistician Anthony Dawson said: “Looking at the components of the flash HICP in Ireland for July 2022, energy is estimated to be down 1.6 per cent in the month but up 50.4 per cent since July 2021. For the euro zone overall, energy prices were up by 0.4 per cent in the month and up by 39.7 per cent on an annual basis.”

In its latest quarterly bulletin, published earlier this month, the Central Bank of Ireland said it anticipated that annual inflation would peak at 9 per cent over the coming months before beginning to decline.

Meanwhile, separate figures released by Eurostat on Friday showed that most euro zone economies continued to grow strongly in the first six months of the year despite fears that a recession could be just over the horizon.

Euro zone gross domestic product (GDP) — the total value of all finished goods and services produced within the economies of the single currency area — expanded by 0.7 per cent in the three months to the end of June, up from 0.5 per cent between January and March.

The French (+0.5 per cent), Italian (+1 per cent) and Spanish (+1.1 per cent) economies expanded in the second quarter, probably boosted by tourism and summer travel. The Latvian, Lithuanian and Portuguese economies all contracted in the second quarter; all three economies had rebounded sharply over the 12 months to the end of June 2022. Portugal’s economy had grown 6.9 per cent since June 2021 with Latvia and Lithuania’s economies expanding by 2.8 per cent and 2.5 per cent.

European economy commissioner Paolo Gentiloni said the growth figures were “better than expected”.

“In particular Italy and Spain did well,” he said in a tweet. “We are not in a recession, but uncertainty remains for the next few months and inflation remains at record levels.”