For the first time in almost three years, Ireland’s rate of inflation has dipped beneath the European Central Bank’s (ECB) target of 2 per cent. According to the Central Statistics Office’s (CSO) latest HICP (harmonised index of consumer prices) preliminary estimate, a 1.7 per cent increase in prices was noted from March of the previous year to the same month this year. Prior to this, the HICP index had not fallen under 2 per cent since June 2021.
The annual rating displayed a decrease from February’s 2.3 per cent, primarily propelled by a decrease in energy costs, which saw a monthly decline in March of 3.1 per cent and an 8.4 per cent annualised drop. Simon Harris has voiced the need to rethink strategies related to labour costs, as a means of supporting smaller businesses that are facing economic challenges.
The Irish data will be incorporated into the broader eurozone inflation statistics set to be released on Wednesday, where a decline for March is also anticipated. As price growth begins to subside, there are speculations about the ECB initiating a sequence of interest rate cuts in the foreseeable future. Frankfurt is likely to implement between two to four rate cuts this year.
Despite the HICP being employed for comparisons between eurozone countries, the Consumer Price Index (CPI) represents the official measure of Ireland’s inflation. This measure placed the principal inflation rate in February at 3.4 per cent. Most recent figures from the HICP hint at a 0.3 per cent monthly decrease in prices within the Irish economy. However, the HICP, barring unstable energy and unprocessed food, is assumed to have escalated by 2.8 per cent since March 2023.
Meanwhile, food prices are believed to have reduced by 0.1 per cent in March, but to have surged by 2.6 per cent over the last year. On the other hand, transport costs rose by 3.1 per cent within the month and recorded a 3.8 per cent increase over the last year up till March.
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