Business

Irish inflation drops to three-year low of 1.6%

Falling energy prices push headline inflation lower but food prices still rising

The annualised rate of price growth in Ireland was put at 1.6 per cent in April down from 1.7 per cent in March

Eoin Burke-Kennedy
Mon Apr 29 2024 - 11:59

Irish inflation fell to a three-year low of 1.6 per cent in April, according to the Central Statistics Office’s (CSO) latest flash estimate for the harmonised index of consumer prices (HICP).

The annualised rate was down from 1.7 per cent in March and was below a rate of 2.4 per cent for the euro zone as a whole.

The latest softening of price growth was driven was falling energy prices internationally. While energy prices were estimated to have increased by 1 per cent in the month of April, they were down by 6.3 per cent in year-on-year terms.

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

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The easing of headline inflation across the euro zone is expected to prompt a change in European Central Bank monetary policy with Frankfurt forecast to reduce interest rates in June following 10 straight rate hikes since July 2022.

ECB policymakers are expected to implement two, three or possibly even four interest rate cuts this year if inflation continues to soften.

While the HICP 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 2.9 per cent in March.

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The latest HICP figures showed that prices rose by 0.2 per cent on monthly basis in April.

The barometer also indicated that food prices are still rising not just on a monthly basis but also in annual terms. The CSO said food prices are estimated to have gone up by 0.6 per cent in the last month and risen by 2.6 per cent compared with April last year.

Underlying inflation, which excludes volatile energy and food prices, was estimated to have grown by 2.6 per cent since April 2023, the CSO said.

Separate figures from the agency showed the volume of retail sales rose by 1.7 per cent in the month and was up by 1 per cent in the 12 months from March. Excluding volatile car sales, retail volumes were up by a more modest 0.3 per cent in the month and by 1.6 per cent in the year.

The largest monthly volume increases were recorded in department stores (+15.7 per cent); books, newspapers and stationery (+4.4 per cent); and motor trades (+3.4 per cent).

The highest monthly volume decreases were in electrical goods (-4.9 per cent); hardware, paints and glass (-4.7 per cent); and in bars (-3.9 per cent).

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times

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