Irish consumer price data for June, due later this week, is expected
to show that inflation is continuing to fall, economists said today.
Irish inflation has eased this year from a 16-year high of seven percent in late 2000 and is seen falling to between 5.1 per cent and 5.3per cent in June from 5.4 per cent the previous month.
Ireland's harmonised index of consumer prices - used for intra- European Union comparison - was expected to ease from last month's4.1 per cent, which was one per cent above May's EU average. Oneeconomist predicted a rate of 3.9 per cent.
"The picture is obscured somewhat by uncertainty over food prices,but we should see the impact of the mortgage rate reduction in thewake of the ECB's May rate cut," Mr Austin Hughes, economist at IIBBank, said.
He forecast a modest decline to around 5.3 per cent year-on-yearbut added that the food component - specifically meat and potatoprices - could add an upside risk.Mr Alan McQuaid, economist atBloxham Stockbrokers, forecast a monthly increase of 0.3 per cent inJune to give an annual inflation rate of 5.1 per cent.
Unprocessed food prices would appear to be easing, oil priceshave weakened, and the ECB's latest rate cut will help mortgagerates, so hopefully we'll see a lower figure, he said.
We should see inflation ticking down gradually from heretowards a year-end rate of around four per cent, he added.
Mr McQuaid predicted a harmonised rate of 3.9 per cent.
Economists said last month they believed the worst was over forIrish inflation this year. Mr Jim Power of Friends First in Dublinsaid the June index would also show some impact from summer sales,but argued that the effect of weaker oil prices would not show upuntil July.
"I see upward pressure this month from food prices -particularly non-seasonal goods - and from the services sector," hesaid.But generally speaking Irish inflation has come off the boil,he added.
Mr Power forecast an annual rate of 5.1 per cent, withinflation falling to 4.2 per cent by year-end to give an averageannual rate of 4.8 per cent.
Ireland's soaring inflation rate last year was offset, someeconomists have argued, by the country's double-digit economicgrowth. The OECD recently predicted Irish growth would fall to 7.75per cent this year. It warned inflation remained a concern.