Irish prices for goods and services up 4.6% over past year

Prices for consumer goods and services in Ireland increased by 4.6 per cent in the past year, which is slightly below the rate of increase in the euro zone more widely, according to new data from the Central Statistics Office (CSO).

The EU Harmonised Index of Consumer Prices (HICP) for Ireland is estimated to have increased by 4.6 per cent in the 12 months to July, and by 0.2 per cent since June. This compares with inflation of 4.8 per cent for Ireland in the 12 months to June and an annual increase of 5.5 per cent for the euro zone in the same period.

Energy prices are estimated to have increased by 0.2 per cent in the month and decreased by 1.3 per cent over the 12 months.

The data also shows that food prices are estimated to have risen by 0.2 per cent in the past month and increased by 8.6 per cent in the past 12 months.

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Excluding energy and unprocessed food, inflation is estimated to have risen by 5 per cent since July 2022.

Transport costs increased by 1.3 per cent in the month and decreased by 4.1 per cent in the 12 months to July.

Minister for Finance Michael McGrath said the data indicates that Irish consumer price inflation “remains on a downward trajectory”, pointing out that it is down from a peak of 9.6 per cent in July of last year.

“As the fall in wholesale energy prices is passed on at the retail level we expect headline inflation to ease further in the months ahead,” he said. “I am also conscious that core inflation – that is excluding energy and food prices – is still running at 5 per cent. This largely reflects the strength of the economy right now and the achievement of full employment. This is projected to ease, albeit at a somewhat slower pace than for headline inflation.”

Headline euro zone inflation fell to 5.5 per cent in June from 6.1 per cent a month earlier and a peak of 10.6 per cent last October. However, core inflation – which excludes volatile items such as energy and food – actually rose slightly to 5.5 per cent, according to Eurostat, the EU statistics agency. The European Central Bank (ECB) inflation target is 2 per cent.

ECB president Christine Lagarde has said the organisation will have an “open mind” in September on whether to increase future rates or press the pause button after pushing through a ninth increase in a row to leave its main lending rate at 4.25 per cent.

While Ms Lagarde previously emphasised following recent rate announcements that the ECB had more ground to cover in raising borrowing costs to rein in inflation, she said on Thursday that “at this point in time, I wouldn’t say” that remains the case.

In the Republic banks have been more active at passing on rising ECB rates to businesses than mortgage holders.

The average interest rate on new Irish business loans had almost doubled to 6.05 per cent in the year to May, resulting in borrowing costs that are about a third higher than those faced by companies across the wider euro zone, according to the Central Bank. By comparison, the average new Irish mortgage rate increased by 40 per cent over the same period, to 3.84 per cent, it said.

The HICP is a different measure of price growth to the CSO’s consumer price index. It feeds into Eurostat estimate of euro zone inflation.

Eurostat will publish July’s flash estimates of inflation for the whole of the euro zone, including Ireland, on Monday.