Irish inflation drops to lowest level in 2½ years as energy prices decline

Price growth of 2.3% is the lowest since the middle of 2021 and comes as energy prices on wholesale markets continue to fall

Inflation in the Irish economy has fallen to 2.3 per cent, its lowest level in 2½ years and close to the European Central Bank’s (ECB) target rate of 2 per cent.

The softening of headline price growth, detailed in the Central Statistics Office’s latest harmonised index of consumer prices (HICP), comes amid a significant decline in energy prices internationally and on the back of 10 interest rate hikes from the ECB.

The CSO said the latest HICP is estimated to have risen by 2.3 per cent in the 12 months to November, down from a trend rate of 3.6 per cent in October. Prices were said to have fallen by 1.1 per cent in the month of November.

The Minister for Finance Michael McGrath welcomed the decline, saying lower energy costs, when combined with Government supports to help people meet higher energy prices taking effect, would result in reductions in households’ bills.


Energy prices are estimated to have fallen by 5.8 per cent in November alone and decreased by 9.9 per cent over the 12 months to November.

Mr McGrath was speaking ahead of launching a new initiative to improve financial literacy across all generations of the population.

He said that next week, his department would learn how much corporation tax had been received for November, which is the most important month of the year for that heading. The Government is hopeful the return will reverse the downward trend in corporation tax seen in recent months.

“It is a key month for us in terms of collecting taxation. We have had three successive months now with weakness in corporation tax receipts, and November is a vital month.

“Last year we collected €13.5 billion overall in November. Of that corporation tax was about €5 billion. So it is a very important month in terms of exchequer returns.”

On Tuesday, the Minister for Public Expenditure Paschal Donohoe said the change in corporation tax receipts seen over the last three months is “a sobering reminder” of why the Government should be running budget surpluses.

A breakdown of the latest CSO data showed food prices are estimated to have grown by 0.3 per cent in the last month and increased by 6.2 per cent in the last 12 months while transport costs, driven by lower air fares, decreased by 1.7 per cent in the month and fell by 0.2 per cent in the 12 months to November.

The HICP excluding energy and unprocessed food prices, which is used to measure core or underlying inflation, was calculated to have increased by 3.9 per cent since November 2022, down from 4.6 per cent previously.

While the HICP is used to allow comparisons across euro zone countries, the official measure of Irish inflation is the Consumer Price Index (CPI). The latest CPI for October put inflation in the Irish economy at 5.1 per cent. The disparity between the two rates reflects the inclusion of mortgage interest in the CPI.

The latest HICP for the State will feed into wider euro zone inflation figures for November, which are due to be published on Thursday.

If the strength of inflation surprised on the way up, it is falling faster than many commentators and policymakers had predicted.

ECB president Christine Lagarde warned earlier this week that while euro zone inflation pressures were easing as expected, wage growth was still strong and the outlook especially uncertain, suggesting the ECB’s fight to contain price growth was not yet done.

“This is not the time to start declaring victory,” Ms Lagarde told a meeting of MEPs in Brussels. “We need to remain attentive to the different forces affecting inflation and firmly focused on our mandate of price stability.”

She said she expected the weakening of inflationary pressures to continue but overall price growth could accelerate in the coming months and the medium-term outlook is surrounded by “considerable uncertainty”.

“This is the lowest level inflation we have had since the summer of 2021. We have seen a fall in actual price levels in the month of November, which is particularly welcome,” he said.

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times

Harry McGee

Harry McGee

Harry McGee is a Political Correspondent with The Irish Times