Ireland surpasses euro area inflation as core readings continue to rise 

While Irish inflation remains just 0.1% higher than the annual euro average, its rate of decline has been notably slower

While on the decrease, underlying readings have remained stubbornly high, with consumer inflation figures actually increasing when fuel and unprocessed food were excluded

Annual Irish inflation has fallen at a notably slower pace than its euro area counterparts, with new figures coming just two weeks before the ECB's crunch decision on further interest rate hikes.

While Irish inflation remains just 0.1% higher than the annual euro average of 6.9%, its rate of decline has been outpaced by the now 20-member currency union, which has declined by more than 1.6% since February. 

Falling by just over 1%, annual Irish inflation declined from 8.1% to 7% in the same period. 

While on the decrease, underlying readings have remained stubbornly high, with consumer inflation figures actually increasing once fuel and unprocessed food are excluded, rising from 7.4% to 7.5% last month. Stripping out further items such as alcohol and tobacco, the rate of inflation rose by 0.1% to 5.7% in the same period.

Unprocessed food inflation rose to 14.7% from 13.9% in February, with service inflation also rising from 4.5% to 5.1% month-on-month.

As falling energy prices continue to put downward pressure on inflation, rising core readings have been continually used by ECB policymakers to defend hiking interest rates, with the bank's chief economist, Philip Lane warning that underlying inflation pressures would necessitate further rate hikes following the bank's last increase in March.

It is now believed that policymakers have converged on a 25 basis point increase in interest rates ahead of their meeting on the 4th of May, which would be the bank's seventh rate hike since July 2022. 

If implemented, the ECB's main refinancing rate would increase to 3.75%, up from just 0% less than a year ago.

According to sources, the debate still remains open, with the final decision set to heavily depend on April inflation data and ECB's quarterly bank lending survey, both of which are due just two days before the May 4th meeting.