The war in Iran pushed inflation in the Irish economy to 3.7 per cent last month, its highest level in almost two years, according to the Central Statistics Office (CSO).
The biggest drivers of the increase were transport fuels and home heating oil which rose on the back of higher oil prices internationally.
The latest consumer price index (CPI) the State’s official measure of inflation, indicated diesel and petrol prices increased by 26.1 per cent and 9.2 per cent respectively on an annual basis in April while home heating oil was up by a whopping 80.4 per cent.
Housing, water, electricity, gas and other fuels, which encompasses home heating oil, was the biggest single component of inflation, accounting for 1.27 per cent of the 3.7 per cent recorded in April.
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Private housing rents were also up by 4.1 per cent in the 12 months to April while average mortgage interest payments rose 6.8 per cent.
Food prices rose at an annual rate of 2.1 per cent in April. There is concern that elevated energy prices will soon translate into elevated food price inflation.
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The latest estimate of price growth in the Irish economy comes at a pivotal moment for the global economy with the ongoing standoff between the United States and Iran causing a sudden spike in energy prices.
The CSO said consumer prices rose by 0.5 per cent in the month of April. This compares with a monthly rise of 1.8 per cent in March when the first impact of the Middle East conflict was felt on prices here.
[ Irish inflation could hit 7% if Hormuz blockade continues for rest of year – AIBOpens in new window ]
The agency said the most significant monthly price increases were in information and communication (+1.6 per cent) and housing, water, electricity, gas and other fuels (+1.1 per cent).
The rise in information and communication prices was primarily due to increases in the prices of mobile communication services.
[ Irish house price growth slows to lowest rate in more than two yearsOpens in new window ]
“These inflation figures aren’t good news for consumers, and it isn’t contained to Ireland. US inflation out this week hit its highest level since May 2023,” Kate English, chief economist at Deloitte Ireland said.
“What is clear from the consumer price index published today is that the pressure on energy supply chains is driving prices up,” she said.
“This will be something the European Central Bank monitors closely one month out from its next meeting on interest rates,” English said.
“One area to watch in Ireland is our grocery bills. When the military conflict in the Gulf began, there was a higher base for food inflation, it sat at 3.9 per cent in January,” she added.
“While today’s data shows a decline in food price inflation to 2 per cent, it needs continued monitoring. Further pressure is being put on food prices as gas and fertiliser costs increase due to supply issues caused by the Gulf conflict,” she said.
The latest figures come amid warning that inflation in Ireland could go much higher in the current Strait of Hormuz standoff continues.
In its latest economic outlook, AIB warns that price growth could – in a severe scenario – accelerate to 7 per cent this year if the Strait of Hormuz remains blockaded for an extended period and oil prices increase further.
