Inflation could top 7% if Iran crisis deepens

AIB Economic Outlook Report expecting lower rate of 4% this year

Ireland’s inflation rate could surpass 7% this year in a worst-case scenario if the oil crisis sparked by the war in the Middle East continues into the second half of 2026, a new report warns. Picture: AP Photo/Eric Gay

Ireland’s inflation rate could surpass 7% this year in a worst-case scenario if the oil crisis sparked by the war in the Middle East continues into the second half of 2026, a new report warns.

The AIB Economic Outlook Report for May published on Thursday said that geopolitical risks sparked by the conflict in the Middle East and the ensuing energy crisis are testing the Irish economy, with inflation continuing to rise. But the report does not believe the inflation shock sparked by the war in Ukraine in 2022 will be repeated, instead predicting oil prices to to fall steadily as the Strait of Hormuz slowly reopens in the coming months.