Eurostat: Irish inflation jumped to 6.9% in March amid Ukraine fallout             

Russian attack and its effects on everything from energy to grain will disrupt economies further, the ESRI has warned

Irish inflation jumped to 6.9% in March from 5.7% in February, as the Ukraine war continued to drive up the prices of energy and food, according to early estimates by the EU statistics office.

The latest readings from Eurostat are based on harmonised measures that help make comparing inflation rates across EU states easier.       

The fallout is particularly stark for Ireland, with Eurostat's 6.9% inflation reading contrasting sharply with the 0.1% rate recorded in March last year.  

Global price pressures for energy and food have continued unabated since Russia invaded Ukraine on February 24. 

Russia exports significant amounts of gas and oil to European countries, while Ukraine is a large supplier of grains including wheat to global markets.                   

Eurostat said eurozone-wide inflation reached 7.5% in March, up from 5.9% in February. That compares with the 1.3% reading in March 2021.     

In Ireland's case, there has been little difference in recent months between the Eurostat harmonised and the conventional consumer price index that is used as the national measure of inflation here. The CSO is due to publish both inflation measures for March on Thursday.  Eurostat said: 

Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in March, followed by food, alcohol and tobacco, non-energy industrial goods and services.

Economists have waned that Irish inflation still has further to go. 

The Economic and Social Research Institute said last month that inflation would likely peak at 8.5% in the early summer months and then moderate. However, inflation will stay at relatively elevated levels through 2023, the think tank said.                          

Capital Economics said the Eurostat figures make it even more likely that the ECB will be forced to hike interest rates to rein in inflation. It predicts three successive quarter point rate increases this year.   

"We now forecast that headline inflation will average around 6.5% this year, and the risks lie to the upside. As a result, we think that the ECB will soon conclude that it can’t wait any longer before starting to raise interest rates. We have pencilled in three 25 basis point rate hikes for this year," said Jack Allen-Reynolds, senior Europe economist at Capital Economics.