Irish inflation unexpectedly rises to 1.9%, CSO says

Latest flash estimate for the harmonised index of consumer prices (HICP) shows prices rose by 0.5 per cent during May

Headline inflation in the Irish economy unexpectedly rose to 1.9 per cent in May, up from 1.6 per cent the previous month, according to the Central Statistics Office’s (CSO) latest flash estimate for the harmonised index of consumer prices (HICP).

The figures showed that prices rose by 0.5 per cent on monthly basis in May, driven by transport costs, including air fares, which rose by 1.5 per cent in the month and were up by 7.1 per cent in annual terms.

The uptick in headline price growth comes despite falling energy prices. The CSO said energy prices were estimated to have fallen by 0.3 per cent in the month and decreased by 3.6 per cent over the 12 months to May.

The Irish numbers will feed into wider euro zone inflation figures due out on Friday.

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The euro zone data for May will inform the European Central Bank’s next interest rate decision, due in early June. Frankfurt policymakers are expected to reduce interest rates next month following 10 straight rate hikes since July 2022 and to implement several interest rate cuts later this year if headline inflation continues to soften.

While the HICP is used to allow comparisons across euro zone countries, the official measure of Irish inflation is the consumer price index (CPI). That put the headline rate of inflation in Ireland at 2.6 per cent in April.

The barometer also indicated that food prices remain unchanged on a monthly basis but were up 2.3 per cent in annual terms.

Underlying inflation, which excludes volatile energy and food prices, was estimated to have grown by 2.5 per cent since May 2023, the CSO said.

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times