Irish inflation moderates to 1.3% ahead of expected ECB rate cut

Irish inflation moderated to 1.3 per cent in February, down from 1.7 per cent the previous month, according to the latest flash estimate for the harmonised index of consumer prices (HICP).

On a monthly basis, prices rose by 0.7 per cent as consumers faced higher energy, transport and food costs. The Central Statistics Office, which collates the data, said energy prices rose by 0.7 per cent in the month but were down by 2.5 per cent over the 12 months to February.

Food prices increased by 0.4 per cent in the last month and by 2.2 per cent in the last 12 months while transport costs, linked to higher fuel prices, rose by 1.7 per cent in the month and by 2.8 per cent year-on-year.

The HICP will feed into February’s inflation data for the euro zone as a whole, which will be published on Monday.

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Headline inflation across the euro area was confirmed at a six-month high of 2.5 per cent in January. Monday’s inflation print comes ahead of the European Central Bank (ECB)’s March policy meeting on Thursday.

The increased rate of price growth is unlikely to deter ECB policymakers from reducing interest rates as concern over Europe’s flagging growth metrics overtakes inflation.

Frankfurt cut interest rates by a further quarter point to 2.75 per cent in January as growth across the bloc stagnated

ECB president Christine Lagarde said the central bank’s five cuts in interest rates since June last year from a peak of 4 per cent were in line with the bank hitting its inflation target of 2 per cent over the medium term.

However, she warned that “headwinds” meant the euro area economy was “set to remain weak in the near term”.

A potential spanner in the works is the looming threat of tariffs from the US.

President Donald Trump this week threatened to place 25 per cent tariffs on imports from the EU, saying it “was formed to screw the United States”.

“It’ll be 25 per cent generally speaking, and that will be on cars and all other things,” he said.

Mr Trump’s latest tariff threat raise the prospect of a tit-for-tat trade war with Ireland’s €73 billion export trade with the US caught in the middle.