Inflation increased again in February to 8.5% following three months of declines

Inflation had been falling for three months in a row but it is now increasing once again. 

Inflation in February rose by 8.5% as the European Central Bank (ECB) meets today to decide on the next round of interest rate increases in an attempt to stem further increases.

Annualised inflation rates had been slowing for three months in a row and hit 7.8% in January. However, prices once again rose in February largely due to increases in the prices of electricity, gas, solid and liquid fuels which all saw the biggest increases.

February is now the 17th straight month of inflation being above 5%. It also marked the anniversary of the war in Ukraine which led to massive spikes in energy prices across the world as Russia was sanctioned for the invasion.

The areas that saw the biggest increases were in Housing, water, electricity, gas and other Fuels up 26% followed by food and non-alcoholic drinks, up 13.1%. The cost of restaurants and hotels increased by 8.9% with the price of alcoholic drinks and tobacco increasing 5%.

Breaking down energy costs, the CSO shows that the cost of electricity went up 62.7% compared to February last year, gas went up 86.1%, solid fuels went up 46.1%, and liquid fuels such as home heating oil went up 17.3%.

For individual food items, sugar saw the largest increase year-on-year with prices going up 30.8%, followed by frozen fish up 26.9%, milk up 26.8%, eggs up 22.9% and butter up 22.2%.

There were few examples of where prices actually went down but one area was education where costs dropped 6.3%. This was one area targeted by the government for support when it reduced the third-level registration fees by €1,000.

Anthony Dawson, statistician in the prices division, said: “The latest publication for the Consumer Price Index (CPI) shows that prices for consumer goods and services in February 2023 increased by 8.5% on average when compared with February 2022. This was up from 7.8% in the 12 months to January 2023.” The CSO also published the national average price for selected goods and services in February.

Mr Dawson said that costs for staples such as 800g loaf of white sliced pan went up 24c, an 800g loaf of brown sliced pan went up 23c, a two-litre of full fat milk went up 48c, while a pound of butter went up 69c - all compared to February last year.

Today the ECB is due to meet and announce a new interest rate hike as it tries to get a handle on the stubbornly high inflation. A 0.5% increase in interest rates is expected which would bring the cumulative increase since July 2022 to 3.5%.