Irish inflation drops to 2.5% as energy prices fall

Latest figures from Eurostat show Irish inflation rate falling to lowest rate in over two years

Compared with October, annual inflation across the 27-nation EU fell to 3.1%, compared to a eurozone figure of 2.4%

Irish inflation has tumbled once again from record highs in 2022, closing further in on the eurozone average of 2.4%. 

Latest figures from EU statistics agency, Eurostat found Irish inflation fell to a more than 2-year low of 2.5% in November, driven by consecutive falls in domestic energy prices.

Down significantly from 3.6% in October, according to Eurostat measurements, Ireland had one of the largest monthly falls in inflation figures, hovering just marginally above the euro area average. 

However, latest figures reflect a wide range of price levels across the 20-country eurozone as some Governments move to withdraw subsidies shielding customers from hefty energy price hikes. 

On one end of the spectrum, Belgium has entered a second month of deflation with price levels now at -0.8%, while Czechia continues to grapple with inflation of 8%, remaining unchanged from the previous month.

Compared with October, annual inflation across the 27-nation EU fell to 3.1%, compared to a eurozone figure of 2.4%, with price levels falling in twenty-one EU member states, remaining stable in three and rising in three. 

Two inflation figures

Latest figures for Irish inflation, measured by Eurostat's Harmonised Index of Consumer Prices (HICP) reflect a growing gap between figures calculated by the Central Statistics Office's (CSO) Consumer Price Index. 

Just last week, the CSO said Irish inflation fell to a more than two-year low of 3.9% in November following a drop in energy prices, down from the annual increase of 5.1% recorded in October.

However, Eurostat's HICP does not take Irish mortgage rates into account when calculating inflation, leading to a growing disparity between the EU agency and the CSO. 

Following ten interest rate hikes by the European Central Bank since July 2022, Irish mortgage rates have risen by an average of 37% annually, leading to the significant difference between Irish inflation of 3.9% as measured by the CSO, and 2.5% as measured by Eurostat. 

Excluding mortgage rates, the CSO said Irish inflation fell by 0.9% in the month and increased by 2.8% in the year, reflecting a figure much closer to Eurostat's 2.5% for November.

Across the euro area, food, alcohol & tobacco had the highest annual rate in November at 6.9 %, compared with 7.4% in October, followed by services at 4% and non-energy industrial goods at 2.9%.