The annual rate of inflation rose in December to 3.2%, the latest “flash estimate” from the Central Statistics Office shows.
After falling from over 3.5% to 2.5% in November, a slight increase in the rate was not unexpected.
The sharp fall in inflation in November was mirrored across the euro zone and gave rise to heightened speculation among market traders that the European Central Bank would start to cut interest rates in the coming months.
The ECB raised rates by 4.5 percentage points at ten successive meetings between July 2022 and September 2023.
The “flash estimate” of inflation is based on the Harmonised Index of Consumer Prices (HICP) which is used to compare consumer price movements across the EU.
The Consumer Price Index (CPI) – which is the official measure of inflation in Ireland – includes items such as mortgage interest payments, which do not feature in the HICP.
As mortgage interest payments are increasing, the CPI rate is generally higher. It registered at 3.9% in the year to November.
The CSO said the core HICP rate, which excludes energy and unprocessed food, was estimated at 4.3% in the year to December, up from the rate of 3.9% in the year to November.
Today’s CSO figures show that energy prices are estimated to have fallen by 2.6% in December and decreased by 6.4% on December 2022.
Food prices remained on a monthly basis in December, but increased by 5.2% on an annual basis.
Meanwhile, transport costs rose by 0.7% in the month and increased by 3.9% in the 12 months to December, the CSO added.
Eurostat, the euro zone statistics agency, will publish flash estimates of inflation for the euro zone for December tomorrow.
Reacting to today’s inflation ‘flash estimate’, Finance Minister Michael McGrath said the figures reflected just one month’s data.
“Leaving this increase aside, I would emphasise that the overall trajectory remains one of easing inflation over the course of this year and we stand by the forecast that we made on Budget Day that inflation across 2024 will average just under 3%.”