The Irish economy has witnessed a decline in inflation to a fresh three-year nadir, closely resembling zero per cent, predominantly down to a continuous decrease in energy prices. The most recent provisional calculation for the harmonised index of consumer prices (HICP) positioned the yearly rate of price growth in October at 0.1 per cent, in comparison to a Eurozone average of 1.7 per cent over the past year until September. The freshest HICP figures released by the Central Statistics Office (CSO) also downgraded the leading rate of inflation in Ireland in September to zero per cent from an earlier estimate of 0.2 per cent. Falling energy prices mainly powered this softer inflation level. The HICP, excluding energy and untreated food, was projected at 1.7 per cent.
The Irish rate will contribute to broader Eurozone inflation data expected to be released on Thursday. These Eurozone statistics are anticipated to set the course for additional European Central Bank (ECB) interest rate reductions. Given the faster-than-predicted easing in inflation, Frankfurt is predicted to carry out an additional four rate cuts from now until the forthcoming March. Even though energy prices are expected to have risen by 0.3 per cent in October, they have dropped by 13.5 per cent over the past year to October. Food prices are predicted to have risen by 0.4 per cent in the previous month and have increased by 1.8 per cent in the past year. The HICP is different from the CSO’s consumer price index (CPI), the official inflation measure in the Republic. The HICP, which does not factor in items like mortgage repayments and building materials prices, has dropped faster than the CPI.