Food price inflation in Ireland rose to a 20-month high of 5 per cent in August, according to the latest flash estimate for the harmonised index of consumer prices (HICP).
The acceleration in basic grocery costs drove overall inflation in the economy to 1.8 per cent in August, up from 1.6 per cent the previous month.
Food price inflation is now running at close to three times the headline rate of price growth. The annualised increase in food prices in August (5 per cent) was the highest since December 2023, the CSO confirmed.
The acceleration in food prices is being driven by higher agricultural output prices.
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Farm costs remain elevated from higher energy and fertiliser prices which has inflated the cost of basic food items.
The other main components of the flash HICP, energy and transport prices, both fell in August.
Energy prices are estimated to have decreased by 0.3 per cent in the month and fallen by 0.1 per cent since August 2024 while transport prices, including air fares, were down by 0.5 per cent in the month and by 2.4 per cent in annual terms.
The HICP, excluding energy and unprocessed food prices otherwise known as the underlying rate of inflation, is estimated to have grown by 1.9 per cent since August 2024.
Alex Deaton, junior dealer at fintech firm Ebury (Ireland) said the latest figures come “amid concerns around the new US tariffs squeezing margins and forcing many Irish businesses to pass higher costs on to consumers, which could also be compounded by the risk of importing inflation through more expensive goods, both of which may risk heating inflationary pressures further.”
“While inflation is currently running below the euro zone average, the outlook is far from clear,” he said.
“Ongoing global trade tensions, volatile commodity prices, and currency swings is likely to keep Irish businesses on their toes in the months ahead,” he said.
The latest Irish figures will feed into wider euro zone figures due out tomorrow.
Financial markets expect the European Central Bank (ECB) to hold interest rates steady at its next meeting in September but the incoming impact of tariffs, currency fluctuations and a likely downturn in global trade has made the outlook for interest rates complicated.
