Irish inflation of 9.5% shows price pressures stay stubbornly high

CSO figures show energy prices increased 13.6% from September and have climbed 47.6% since October 2021

Excluding energy products, consumer prices rose by a still elevated annual rate of 5.9%.

Irish annual consumer price inflation accelerated to 9.5% in October from 8.6% in the previous month, suggesting price pressures will stay stubbornly high for households and businesses for some time to come.  

The figures from the Central Statistics Office are based on harmonised figures that make it easier to compare inflation rates across the eurozone by using the same basket of goods and services by way of comparison.

Prices in Ireland estimated to have risen by 9.5% in the year to October 2022https://t.co/M3sjzhrsDd#CSOIreland #Ireland #CPI #ConsumerPrices #Inflation #Deflation #Prices #BusinessStatistics #Business #BusinessNews #IrishBusiness pic.twitter.com/4XKzqxABXd

— Central Statistics Office Ireland (@CSOIreland) October 28, 2022

  

They also suggest household utility bills were increasing in the month as energy companies passed on price hikes and may put the spotlight on energy companies at a time when the price of wholesale gas, which is used widely to generate large amounts of electricity on the all-Ireland power grid, has been falling sharply from the record high levels in the summer.            

The Central Statistics Office figures show energy prices increased 13.6% from September and have climbed 47.6% since October 2021. 

Excluding energy products, consumer prices rose by a still elevated annual rate of 5.9%. 

Interest rate hike

The European Central Bank — which hiked its official interest rats by three quarters of a point on Thursday — is fighting inflation because it fears the massive rise in energy costs since Russia invaded Ukraine in February will spill over and become embedded across the eurozone.

However, there are fears the ECB rate hikes will do more damage than intended should they help trigger deep recessions in major EU countries, such as Germany, France, and Italy. 

Many economists predict the Irish economy, thanks to the robust exports from the multinationals based here and buoyant corporate tax receipts, will keep growing next year.               

The Economic and Social Research Institute had forecast earlier this month that price inflation of just over 8% this year would stay stubbornly high at 6.8% in 2023. The Government in its budget forecast inflation of over 7% in 2023.   

International debt markets also took notice of the new inflation data. French inflation came in above economists' forecasts, while in Germany it rose much more than expected, by 11.6%, and Italian consumer prices jumped 12.8% — their highest inflation rate since the series began in 1996. 

Eurozone government borrowing costs jumped as the data put rising prices back on centre stage.

However, yields are set to close the week with a significant fall as investors scaled back bets on the European Central Bank's interest rate hiking path. The yield or interest rate on the Irish 10-year bond rose to 2.55% on Friday but has fallen significantly, by 0.4%, in the past week.  

"Today markets are worried about inflation, while yesterday they wanted to look at the dovish side of [ECB president Christine] Lagarde's remarks," Massimiliano Maxia, senior fixed income specialist at Allianz Global Investors, said.

Remarks from the ECB policy meeting on Thursday led investors to price in a slowdown of future rate hikes as the central bank reiterated its commitment to reinvestments and did not discuss the reduction of its vast government bond holdings. 

• Additional reporting Reuters