In September, the Irish economy experienced the lowest headline inflation in three years, recorded at merely 0.2 per cent, according to recent flash estimations from the harmonised index of consumer prices (HICP). This was a significant decrease from 1.1 per cent the month before, and lower than the Euro-zone average of 2.2 per cent. This decline to a 0.2 per cent rate of price increase marked the lowest HICP inflation since March 2021, as observed by the Central Statistics Office (CSO).
The main contributor to this lower price growth was a reduction in energy costs. The CSO reported that these prices had fallen by an estimated 1.4 per cent within the month, and by a substantial 14.1 per cent over the year leading up to September. In contrast, food prices remained steady during the last month and increased by 1.5 per cent over the past year.
However, the core rate of inflation, which is the HICP excluding energy and unprocessed food, still rose by 1.8 per cent since September. This data from Ireland will be included in the wider Euro-zone inflation figures due out this Tuesday. It is anticipated that these statistics will reinforce another interest rate reduction by the European Central Bank (ECB) before the year’s end.
It’s important to note that the HICP deviates from the CSO’s consumer price index (CPI), the official Republic inflation measure that includes mortgage repayments. In August, CPI decreased to 1.7 per cent. The annual rate of 1.1 per cent noted for August is lower compared to July’s 1.5 per cent and the whole Euro-zone’s 2.6 per cent. The last time the HICP hit this low was in April 2021.
According to the CSO, energy prices declined by a further 0.6 per cent in August and had dropped by 9.5 per cent over the past year. However, food prices were estimated to have crept up by 0.1 per cent within the last month and by 2 per cent over the last full year. The HICP excluding erratic energy and unprocessed food costs came to 2.3 per cent in August.