Irish inflation falls below ECB target rate of 2% for first time in nearly three years

Headline price growth in economy falls to 1.7% in March, according to CSO’s harmonised index of consumer prices

Irish inflation has fallen below the European Central Bank’s (ECB) target rate of 2 per cent for the first time in nearly three years.

The Central Statistics Office’s (CSO) latest flash estimate for the harmonised index of consumer prices (HICP) indicated that prices rose by 1.7 per cent in the 12 months to March this year. The last time inflation, as measured by the HICP, was below 2 per cent was in June 2021.

The annual figure was down from a rate of 2.3 per cent in February. The softening of price growth was driven by falling energy prices, which declined by 3.1 per cent month on month in March, and by 8.4 per cent on an annualised basis.

The Irish numbers will feed into wider euro zone inflation figures due out on Wednesday, which are also expected to show a decline for March.


The ongoing drop in headline price growth across Europe comes amid expectations that the ECB will soon begin a cycle of interest rate reductions.

Frankfurt is expected to implement two, three or possibly even four interest rate cuts this year as price growth eases.

While the harmonised index of consumer prices is used to allow comparisons across euro zone countries, the official measure of Irish inflation is the Consumer Price Index (CPI). That put the headline rate of inflation in Ireland at 3.4 per cent in February.

The latest HICP figures show prices in the Irish economy fell by 0.3 per cent on a monthly basis. The HICP excluding volatile energy and unprocessed food is estimated to have increased by 2.8 per cent since March 2023.

Food prices were estimated to have declined by 0.1 per cent in March but to have risen by 2.6 per cent in the past 12 months. Conversely transport costs rose by 3.1 per cent in the month and increased by 3.8 per cent in the 12 months to March.

Paul Walsh of online insurance broker Peopl Insurance said that while the latest figures “mean inflation is much lower today than it was this time last year – when prices in Ireland were estimated to have increased by 6.3 per cent annually, for many people this headline drop in inflation is yet to hit home”.

Mr Walsh noted that the last of the energy credits “which has offered much needed relief to households struggling with higher electricity bills” is to be paid by April 30th.

“This is likely to be the last energy credit paid to households this year – unless the Government decides to pay more next winter. Households will feel the pinch once the last of these credits is paid because while energy costs have fallen, they haven’t fallen enough to make a real difference to people’s pockets,” he said.

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times