Headline inflation in the Irish economy softened to a three-year low of 1.7 per cent in August as the cost of energy on international markets fell.
This was the first time since June 2021 that the consumer price index (CPI), the State’s official measure of inflation, has been below 2 per cent.
The latest figures indicate that electricity prices have fallen by 20.6 per cent in the last 12 months, while gas prices are down by 19.1 per cent.
The Central Statistics Office (CSO) noted that the cost of housing, water, electricity, gas and other fuels, which are grouped as one category, decreased due to a reduction in the price of electricity, gas, liquid fuels (home heating oil) and coal.
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However it noted the decrease was “partially offset” by an increase in the cost of mortgage interest repayments and rents.
Rents were estimated to be up by 4 per cent on an annual basis while mortgage interest payments were up by over 12 per cent, a reflection of higher borrowing costs in the wake of recent European Central Bank (ECB) interest rate hikes.
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The ECB is expected to announce another interest rate reduction following its September meeting in Frankfurt later today.
The fall-off in energy prices here was also countered by higher transport prices with the cost of petrol and diesel up by 4 per cent in the last 12 months. Air fares were also up by 7.4 per cent since this time last year.
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Food prices, which rose sharply in the wake of the energy price shock in 2022, were up by 1.9 per cent on an annual basis.
The underlying or core rate of inflation, which excludes volatile energy and food prices, remained elevated at 2.9 per cent in August, keeping the pressure on households.
Inflation as measured by the CSO’s separate harmonised index of consumer prices (HICP) was put at 1.1 per cent in August. Because it excludes mortgage interest costs from its basket of prices, the HICP has fallen quicker than the CPI.
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