Inflation falls slightly in Ireland but EU reaches record high of 9.6%

Food, alcohol and tobacco are up over 10% while non-energy industrial goods are up 5%.

Inflation in Ireland fell slightly this month to 8.9%, but across the whole eurozone it reached a record high of 9.1%, according to a new flash estimate from Eurostat.

Having been static in Ireland at 9.6% in June and July, the annual rate of inflation fell, but when comparing the inflation month-on-month prices rose by a small 0.1% margin, the stats body said. 

The estimate of 8.9% for August still puts Ireland’s inflation at its highest level since the 1980s.

The eurozone high of 9.1% will heap pressure on the European Central Bank to increase interest rates again which would have an impact on hundreds of thousands of mortgage holders here.

Energy remains the biggest driver of inflation across the Euro area, with prices rising 38.3% in the year to August. This was slightly down on the 39.6% rise in the year to July. Food, alcohol and tobacco are up over 10% while non-energy industrial goods are up 5%.

A fuller set of inflation statistics for August are set to be published in mid-September. These statistics will likely only reinforce calls for the Government to provide support to households in the Budget due to be announced in late September, particularly in the area of energy bills.

The Government has indicated that measures will be included in the budget, but warned that it won’t cover the full gamut of cost-of-living rises facing households.

Euro area #inflation up to 9.1% in August 2022: energy +38.3%, food +10.6%, other goods +5.0%, services +3.8% - flash estimate https://t.co/v8oNUklcoz pic.twitter.com/6Egsg49kRA

— EU_Eurostat (@EU_Eurostat) August 31, 2022

Speaking at an Oireachtas committee meeting on Tuesday, Minister for the Environment Eamon Ryan said discussions are ongoing in Europe on how to solve the problem of gas prices setting the price in the electricity market.

"How do we avoid that 14-fold increase in gas prices leading to a 14-fold or similar such increase in electricity prices?" he asked, adding that a meeting of EU energy ministers next week would examine that issue.