Headline inflation in the Irish economy eased fractionally to 1.8 per cent last month, according to the latest Consumer Price Index (CPI), the State’s official measure of price growth.
This was down from an annualised increase of 1.9 per cent in January and comes against an increasingly complicated economic backdrop with Europe and the US inching closer to an all-out trade war.
Prices on a monthly basis rose by 0.9 per cent in February having fallen by 0.8 per cent the previous month.
Inflation tied to restaurants and hotels rose by 3.1 per cent – on an annual basis – “mainly due to higher prices for alcoholic drinks and food consumed in licensed premises, restaurants and cafes,” the Central Statistics Office (CSO) said.
Transport costs rose by 2.4 per cent primarily due to higher prices for airfares, petrol, diesel and the maintenance and repair of personal transport equipment. This increase was partially offset by a reduction in the price of cars.
Clothing and footwear (-4.1 per cent) and furnishings, household equipment and routine household maintenance (-0.8 per cent) were the only divisions to show a decrease when compared with February 2024.
The underlying inflation rate, which excludes energy and unprocessed food, grew by 2.2 per cent in the 12 months to February.
The latest Irish figures come in the wake of a warnings that the euro zone economy is facing a possible trade shock from US tariffs.
European Central Bank (ECB) president Christine Lagarde said this week that trade, defence and climate issues had the potential to amplify inflation volatility and raising the risk that price growth becomes more persistent.
These forces make it impossible for the ECB to signal policy intent but make it imperative the bank doubles down on its 2 per cent inflation target and outlines how it reacts to various shocks, Ms Lagarde said in a speech in Frankfurt.
Robert Purdue, head of dealing (Ireland) at global financial services firm Ebury, said: “While Ireland’s inflation rate remains low, today’s CPI print suggests that concerns about rising inflation are still potentially on the horizon.
“The data comes just one week after the ECB announced another 25 basis point rate cut, which is likely to provide some relief to Irish businesses,” he said.
However, ECB president Lagarde’s recent remarks on policymakers grappling with “exceptionally high” uncertainty, cast fresh doubts over the pace of potential future rate cuts and inflationary pressures.”
Mr Purdue highlighted Ireland’s vulnerability to the potential consequences of European tariffs and US trade policy.
“As the Irish economy’s recovery is still largely driven by export growth, businesses must remain vigilant in this turbulent economic and geopolitical climate,” he said.
