Inflation in Ireland has climbed to more than 3 per cent again, driven by higher energy and food prices.
The latest flash estimate for the harmonised index of consumer prices (HICP) put the annualised rate of price growth at 3.2 per cent in November, up from 2.8 per cent in October.
This compares to a rate of 2.1 per cent for the euro zone as a whole.
A breakdown of the components for Ireland indicate that energy prices were estimated to have grown by 0.7 per cent in the month and to have risen by 3.3 per cent over the 12 months to November.
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Food prices were estimated to be unchanged in the month but are up 4.2 per cent over the past 12 months, the Central Statistics Office (CSO) said.
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The acceleration in basic grocery costs is now the main financial pressure on households here. Retail analysts Worldpanel by Numerator estimates food inflation here is now running at more than 6 per cent.
Inflation as measured by the HICP, which is different from the CSO’s official barometer of inflation – the CPI (consumer price index) – had fallen to almost zero at the end of last year on the back of falling energy prices.
However, economists had warned that statistical base effects would see inflation temporarily increase in the second half of 2025.
The Irish HICP figure will feed into wider inflation numbers for the euro zone as a whole due out on Tuesday.
With headline inflation for the euro zone hovering at 2 per cent, the European Central Bank’s (ECB) target rate, Frankfurt has halted a series of interest rate reductions. Last month, the bank kept interest rates unchanged again for a fourth successive meeting, insisting monetary policy was in a “good place”.
While the inflation across the bloc has lessened on the back of recent events including the EU-US trade deal, the still as yet uncertain fallout from US tariffs means the outlook remains unclear.
ECB governing council member Joachim Nagel suggested on Monday that he was comfortable with the current monetary-policy settings.
“Our projections also suggest that interest rates are currently in a good place,” the Bundesbank president said in a speech in Seoul, echoing what has become the standard line from ECB officials in recent months. “Eurosystem monetary policy is broadly neutral right now.”
ECB officials are preparing for their final gathering of the year this month, with investors and economists widely anticipating no change.
However, some central bankers worry about downside risks to economic activity and consumer-price growth, and new projections due in December could show inflation in 2026 and 2027 below 2 per cent, which might encourage calls for a rate reduction in December or for keeping further easing on the table for next year.
The forecasts “will include an initial projection for 2028,” said Mr Nagel, who is seen as one of the more hawkish members of the governing council. “Based on these forecasts, we will be able to determine whether we are still on track to meet our medium‑term inflation target.” – Additional reporting Bloomberg
