Irish inflation drops to near three-year low

Falling energy prices drive headline rate lower but underlying price growth remains elevated

The annual rate of inflation in the Irish economy softened to 2.6 per cent last month, down from 2.9 per cent previously.

This was the fourth successive monthly decline in inflation and the lowest reading in almost three years. It comes on the back of a decline in energy prices internationally.

The Central Statistics Office’s (CSO’s) latest consumer price index (CPI), the official measure of inflation here, indicated that electricity prices have fallen by 22 per cent in the last 12 months, while gas prices were down by almost 19 per cent.

The annual cost of clothing and footwear was also down 6.7 per cent.


Food prices, however, remained on an upward curve, rising by 2.5 per cent. Rising grocery prices remains one of the biggest constraints on household budgets.

Consumer Price Index April 2024

Mortgage interest payments were also up by 21 per cent on an annual basis, a reflection of higher borrowing costs in the wake of 10 successive European Central Bank (ECB) interest rate hikes. The ECB is expected to begin reducing interest rates at its next meeting in June.

The fall-off in energy prices was also offset by rising petrol and diesel prices, which were up by 10.6 per cent and 12.5 per cent year-on-year.

The CSO’s underlying rate of inflation, which excludes volatile energy and food prices, remained elevated at 3.5 per cent in April, keeping the financial squeeze on households.

The agency said this is the sixth time since September 2021 that the annual growth in the consumer price index was below 5 per cent, while April was also the sixth consecutive month where the inflation rate was lower than 5 per cent.

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Inflation as measured by the CSO’s separate harmonised index of consumer prices (HICP) was put at 1.6 per cent in April. Because it excludes mortgage interest costs from its basket of prices, the HICP has fallen quicker than the CPI, which includes them.

Separate CSO figures, published on Thursday, showed production in manufacturing industries fell by 19.5 per cent when compared with the previous three-month period.

The figures, which are notoriously volatile, indicated that on a monthly basis manufacturing output nationally rose by 15.7 per cent in March.

The CSO said the “modern sector”, which includes the State’s multinational-dominated pharma industry, experienced an annual decline of 22.3 per cent in production when compared with the same three-month period in 2023. In contrast, annual production in the “traditional sector” grew by 10.6 per cent during the same period.

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times