Inflation eases to 6.3% in April, CSO estimates

Prices in Ireland rose by 6.3 per cent in the year to April, according to a flash estimate from the Central Statistics Office.

Its latest Harmonised Index of Consumer Prices (HICP) estimate has come in lower than the annual HICP inflation rate of 7 per cent recorded in March.

Eurostat, the statistical office of the European Union, is due to publish April’s flash inflation estimates for the euro zone on Tuesday, with all figures subject to revision later in May. In the year to March, euro zone prices climbed 6.9 per cent, similar to the Irish increase.

The CSO estimates that prices rose 0.3 per cent in April compared with March. Food prices increased 0.5 per cent in the month and are running 12.8 per cent higher year-on-year.

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Energy prices fell 1.3 per cent compared to March but were still 12.1 per cent higher compared with April 2022.

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Transport costs also eased, declining 0.9 per cent in the month and dropping 2 per cent over the year.

The HICP excluding energy and unprocessed food is estimated to have risen 5.3 per cent since April 2022, the CSO said.

While the HICP is used to allow comparisons across euro zone countries, the official measure of Irish inflation is the Consumer Price Index (CPI), the latest release of which shows that prices rose 7.7 per cent in the year to March.

Although this rate had eased back from the 8.5 per cent annual increase recorded for February, it marked the eighteenth straight month where the annual rise in the CPI was at least 5 per cent.

The continued increases in consumer prices, including food prices, signals that pressure is likely to remain on households struggling with the cost of living for some time to come.

A report published by the Organisation for Economic Co-operation and Development (OECD) earlier this week found Irish households experienced a significant drop in living standards in 2022 as wages failed to keep pace with soaring inflation.

While the average pretax wage in the Republic rose by 4.8 per cent last year, the Paris-based agency said, real earnings – or how much money a person makes after adjusting for inflation – declined.

Its Taxing Wages 2023 report noted that 17 OECD member countries adjusted their income tax brackets automatically in line with inflation but the Republic is not one of them.

The average amount of income tax paid by workers in the State also rose 0.8 per cent, meaning people ended up paying more tax on a lower real income – or what the OECD described as a “double blow for workers”.

While the corresponding HICP flash estimate for euro zone inflation in April has not yet been published, data issued on Friday showed that German inflation unexpectedly eased to 7.6 per cent in April, down from a March rate of 7.8 per cent.

With inflation accelerating in France and Spain this month, the German data has muddied the data picture further for the European Central Bank (ECB), which is battling to bring inflation down to its target of 2 per cent.

The ECB is widely expected to slow its pace of interest rate rises to quarter-point increases, starting from the May monetary policy meeting scheduled for next week.

Its effort to rein in inflation has seen it raise interest rates six times since July 2022, with each of these hikes amounting to at least half a percentage point.