Inflation cools in February to 3.4% as energy prices fall further 

February figures marks only the fourth time that annual inflation has fallen below 5% since September 2021

Core inflation, which excludes volatile price items such as energy and food, rose by 4.6% on an annual basis, with the key drivers of rising prices coming from recreation and culture, up 7% year-on-year as well as restaurants and hotels, up 6.4%. 

Irish inflation fell to 3.4% in February, falling from an annual rate of 4.1% in the previous month, new data from the Central Statistics Office reveals.

It marks only the fourth time that annual inflation has fallen below 5% since September 2021 and is the second time in the same period that inflation has fallen below 4%, reflecting a marginal ease in pricing pressure for Irish households.

February's figures also mark the fourth consecutive month where the inflation rate was lower than 5%, with clothing, footwear and homeware all seeing yearly falls in prices.

Prices on a monthly basis rose by 1% in February, having fallen by 1.3% in the previous month.

Core inflation, which excludes volatile price items such as energy and food, rose by 4.6% on an annual basis, with the key drivers of rising prices coming from recreation and culture, up 7% year-on-year as well as restaurants and hotels, up 6.4%. 

Two sectors saw prices fall on a monthly basis, with alcoholic beverages and tobacco falling by 0.7% and communications falling by 0.3%.

Clothing and footwear saw the largest annual drop in prices, falling by 3.6% in the past 12 months, along with furnishings and household equipment falling by 0.2%.

Despite its yearly decline, clothing and footwear saw the largest monthly increase in price, rising by 3.4% in the month which the CSO said was due to a recovery in sales, followed by transport which rose by 3%.

On an annual basis, electricity and gas prices fell by 16.4% and 12.9% respectively, the CSO said.

The European Central bank has kept its key interest rate unchanged at 4%, however, the regulator is expected to cut before summer as inflation cools.

Eurozone inflation, which peaked at over 10% in late 2022, eased to 2.6% last month, just marginally above the ECB's 2% target.

However, tight labour markets have made monetary policymakers cautious, with the regulator warning that "Although most measures of underlying inflation have eased further, domestic price pressures remain high, in part owing to strong growth in wages."