Prices in the Irish economy increased by 1.5 per cent in the 12 months to the end of July, the Central Statistics Office (CSO) has estimated, as the headline rate of annual consumer price inflation remained unchanged from June.
Volatile food and energy prices – among the main contributors to the spike in inflation since 2021- remained stable in the month from June, according to the latest flash estimate for the harmonised consumer price index (HICP).
Food prices are estimated to be unchanged in the past month, the CSO said, and are up by 1.9 per cent in the past 12 months. Down 5.8 per cent on an annual basis, energy prices are estimated to have remained unchanged in July.
“The HICP excluding energy and unprocessed food prices is estimated to have increased by 2.3 per cent since July 2023,” said Anthony Dawson, statistician in the prices division of the CSO.
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Meanwhile, transport prices, including air fares, increased by an estimated 5.9 per cent over the 12 months and 2 per cent in the month of July alone.
The figures are subject to revision when the final HICP for the month is published in August.
The HICP differs from the CSO’s consumer price index (CPI), the official measure of inflation in the Republic, mainly in the basket of goods used to benchmark average price increases. The CPI, which fell to a three-year low of 2.2 per cent in June, has tended to be higher than the HICP, which does not include items like mortgage repayments and building materials prices, both of which have increased sharply in recent times.
In its quarterly economic bulletin published last month, the Central Bank of Ireland said it expects headline and core inflation, which strips out volatile food and energy prices, to “hover around 2 per cent this year and next”, close to the European Central Bank’s (ECB’s) 2 per cent annual target and corresponding broadly with the path for euro zone inflation.
However, risks remain prevalent, the Central Bank said, due to geopolitical tensions that could stoke further increases in commodities prices globally.
Against this backdrop, it warned the Government to avoid a budget giveaway in advance of the general election. The regulator said it would “not be appropriate” for the Government to repeat the budgetary packages of recent years with the economy at close to full employment and real wages projected to grow.
“Such a scenario would lead to higher inflation, damaging Ireland’s competitiveness and long-term prospects for growth in living standards,” the bank said.
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