The Central Statistics Office (CSO) has reported a 1.5 per cent inflation increase in the Irish economy over the last year till July end, with no change in the rate of yearly consumer price inflation from June. While food and energy prices – major factors in the inflation rise from 2021 – remained consistent over the period from June, based on the most recent flash estimate for the harmonised consumer price index (HICP). According to the CSO’s assessment, there was no change in the food prices last month, but there was an overall increase of 1.9 per cent over the past year. Meanwhile, energy costs, declined annually by 5.8 per cent, but remained constant in July.
Anthony Dawson, a CSO prices division statistician, has stated that the HICP, without the consideration of energy and unprocessed food costs, is supposed to have risen by 2.3 per cent since July 2023. In the interim, transport costs, incorporating airfares, were reportedly up by 5.9 per cent over the year and 2 per cent in July alone.
The published figures are based on the final HICP for the month and may be revised in August. The HICP is distinct from the Republic’s official inflation measure, the CSO’s consumer price index (CPI), mostly in the type of goods used to calculate average price surges. The CPI, which slumped to a low of 2.2 per cent over three years in June, has typically been more than the HICP, which does not account for items such as escalating mortgage repayments and building material costs.
In their latest quarterly financial report released the previous month, the Central Bank of Ireland projected that over the coming and subsequent year, core and headline inflation, which discounts unstable energy and food costs, will likely remain steady at around 2 per cent. This rate aligns closely with the European Central Bank’s yearly target of 2 per cent, while also corresponding fairly accurately with the trajectory for inflation within the euro zone.
Nevertheless, the Central Bank emphasised the persistence of various risks, primarily due to geopolitical strains that have the potential to ignite further escalations in worldwide commodity prices.
In light of these circumstances, the Bank cautioned the Irish Government against implementing a premature budget surge prior to the national elections. The financial watchdog deemed it “unsuitable” for the Government to emulate previous years’ fiscal plans, especially given the near full employment rate and the predicted growth in real wages.
Such an eventuality, the Bank warned, would fuel inflation rates, thereby jeopardising Ireland’s competitive edge and future prospects of enhancing living standards.