Inflation jumps to highest levels in more than two years

Trump’s war in the Middle East has upended the outlook for consumers, says analyst

Inflation has jumped to its highest level in more than two years, hitting 3.6%, the Consumer Price Index published on Thursday shows. Picture: Gareth Fuller/PA Wire

Inflation has jumped to its highest level in more than two years, hitting 3.6%, the Consumer Price Index published on Thursday shows. 

The rise of 3.6% between March 2025 and March 2026 was a considerable jump from the 2.7% in the 12 months to February 2026. This was the highest annual rate of inflation observed in the CPI since January 2024 when the rate of inflation was 4.1%, according to the Cental Statistics Office (CSO).

CSO statistician Anthony Dawson said the most significant monthly price increases were in Transport (+5.2%) and Housing, Water, Electricity, Gas & Other Fuels (+3.9%). "The rise in transport prices was primarily due to increases in the prices of diesel and petrol as well as higher costs for air fares," said Mr Dawson.

Consumer prices rose by 1.6% in the month between February 2026 and March 2026. The divisions with the largest rises in the month were Transport (+5.2%) and Housing, Water, Electricity, Gas & Other Fuels (+3.9%). The divisions that recorded the largest decreases in the month were Food & Non-Alcoholic Beverages and Alcoholic Beverages & Tobacco, both down by 0.3%.

Excluding Energy and Unprocessed Food, the CPI grew by 2.7% in the 12 months to March 2026. Clothing & Footwear saw the largest annual  inflationary rise, up 9% on March 2025, while Education Services rose 8.9%, and Housing, Water, Electricity, Gas & Other Fuels were up 7.2%.

The only division to record a decline when compared with March 2025 was Furnishings, Household Equipment, & Routine Household Maintenance (-0.9%).

"Trump’s war in the Middle East has upended the outlook for consumers," said Chris Beauchamp, IG chief market analyst.  "The monthly surge in headline inflation to 1.6% takes price growth back to levels not seen since early 2023, and is far more consistent with the price pressures of 2022 rather than the more benign environment of 2025 and early 2026.

"This week’s ceasefire has brought down oil prices, but a sustained drop can only come through the full reopening of the Hormuz straits, and even then it leaves plenty of capacity out of action due to damage. Now we wait to see if price growth is going to embed itself at these much higher levels, which would imply a need for rate hikes before year-end.”