Energy prices have come down by 2.7 per cent over the 12 months to January, according to new data from the Central Statistics Office (CSO).
Overall the European Union (EU) Harmonised Index of Consumer Prices (HICP) for Ireland shows prices for consumer goods and services in Ireland increased by 1.5 per cent in the 12 months to January and decreased by 0.9 per cent since December. This compares with inflation of 1 per cent in Ireland in the 12 months to December and an annual growth of 2.4 per cent for the euro zone in the same period.
The data shows that while energy prices are estimated to have grown by 1.2 per cent in the month, they have decreased by 2.7 per cent over the 12 months to January. Food prices are estimated to have fallen by 0.7 per cent in the last month, and risen by 1.4 per cent in the last 12 months.
When energy and unprocessed food are stripped out, inflation is estimated to have increased by 2 per cent since January 2024.
Eurostat will publish flash estimates of inflation from the EU HICP for the euro zone for January 2025 on February 3rd, 2025.
Meanwhile, euro zone consumers do not believe the European Central Bank (ECB) will be able to fully tame inflation over the next 12 months, potentially complicating policymakers’ plans to continue lowering borrowing costs.
The rise in household inflation expectations for the third consecutive month, according to ECB data published on Friday, comes a day after the ECB cut rates to 2.75 per cent and warned that low consumer confidence was likely to drag on the bloc’s weak economy.
Consumers polled last month expected an annual inflation rate of 2.8 per cent over the next 12 months, up from 2.6 per cent in November and the highest level since July, the latest ECB data showed. That rate would be significantly above the ECB’s target of keeping price increases at 2 per cent over the medium term.
Households also fear the central bank will continue to miss that goal and are bracing for an average of 2.4 per cent of inflation over the next three years – the same rate as the bloc’s last inflation reading in December.
What is DeepSeek and why did it send global markets into meltdown?
Inflation expectations are important medium-term drivers of actual inflation as they influence wage demands and spending behaviour, which in recent years has been hit by the strongest inflationary surge in a generation in the wake of the pandemic and Russia’s full-scale invasion of Ukraine.
The latest expectations represent a growing divergence from official forecasts. The ECB last month predicted annual inflation at 2.1 per cent this year and 1.9 per cent in 2026.
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