Ireland’s rate of inflation eased slightly last month, the latest data from the Central Statistics Office (CSO) shows.
The agency said its consumer price index rose by 2.7 per cent year-on-year in January, down from an annual increase of 2.8 per cent in the 12 months to December.
The most significant increases were in education services, where prices rose 8.9 per cent, and in clothing and footwear, where the rise was 7.3 per cent.
Anthony Dawson, a statistician in the CSO’s prices division, said the annual change in education services “reflects a rise in costs associated with third-level education which came into effect from October”.
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The only sectors to show a fall in prices year-on-year were furnishings, household equipment and routine household maintenance, where prices came down 0.6 per cent, and the transport sector, where they declined by 0.1 per cent.
Excluding energy and unprocessed food, the index rose by 2.8 per cent in the 12 months to January.
Prices fell by 0.9 per cent in the month between December and January, the CSO said.
The sectors with the biggest monthly falls were clothing and footwear, which came down 7.2 per cent, and recreation, sport and culture, where the decline was 3.1 per cent.
Alcoholic beverages and tobacco, where prices were up 2.7 per cent, and health, where the increase was 0.3 per cent were the sectors with the largest monthly advances.
Ibec chief economist Gerard Brady said he expects inflation to continue moderating over the next 12 months.
“While there was a rise in inflation in the latter half of 2025, peaking at 3.2 per cent in November, this has moderated quickly and will continue to do so in the year ahead,” he said.
“Prices are now at the same level as they were in July 2025. This slowing momentum will soon be apparent in annual figures. We now expect an overall inflation rate of 2.3 per cent for 2026.” Last year’s rate was 2.2 per cent.
Thomas Pugh, chief economist at audit, tax and consulting firm RSM Ireland, disagrees, saying that slower energy and food inflation had helped to weigh on the headline inflation rate, despite rising prices in the services sector.
“However, we think domestic factors will keep underlying inflation elevated, and mean inflation will average around 2.4 per cent this year,” he said.
“The recent rise in oil prices will filter through to the pumps in the coming months meaning that fuel inflation will rise again, despite being negative currently.”
He said inflation is “likely” to remain above 2 per cent throughout 2026 as domestically generated price pressures “remain elevated”. “This morning’s data showed services inflation rising slightly and the seasonally adjusted unemployment rate ticking back down in the fourth quarter,” he said.
“Given that we expect employment growth of only a little under 2 per cent this year, there’s probably not enough slack in the labour market to materially weigh on pay growth which is a key driver of services inflation.”
He said this would likely be compounded by interest rates.
“At 2 per cent, we doubt the ECB’s deposit rate is restrictive enough to weigh on inflation in Ireland given the strength of domestic demand,” he added. “That all points to services inflation remaining above 3 per cent throughout this year.
“Overall, today’s data suggests that despite headline inflation easing in January, underlying measures of domestic inflation may not fall much further. What’s more, the medium-term risks to inflation will remain firmly to the upside as big increases in day-to-day public spending and bottlenecks in housing supply will remain a source of inflationary pressure.”
