Inflation in the Irish economy jumped to its highest level in 18 months in September, amid another surge in food prices.
Consumer prices were 2.7 per cent higher last month than in September 2024, according to the Central Statistics Office’s (CSO’s) latest consumer price index.
This is the highest inflation has been in the Republic since March 2024, when prices rose by 2.9 per cent on annualised basis.
Among individual categories of goods and services, food and non-alcoholic drink prices increased at the most rapid pace, rising 4.7 per cent in the 12 months to September. However, the annual rate of food price inflation softened somewhat from 5.3 per cent in August, the CSO said.
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Thomas Pugh, chief economist at accountancy firm RSM Ireland, said the fall-off in annual food price inflation from August was “good news” for households, which “should provide some respite”.
Food and energy prices, however, are typically volatile from month to month. Excluding them, so-called core inflation rose by 2.8 per cent over the 12-month period, the CSO said.
Anthony Dawson, statistician in the CSO’s prices division, said the annual change in food and beverage prices “reflects a rise in prices across a range of products, such as beef and veal and milk”.
Beef and veal prices have surged by 23.7 per cent since last September, while whole milk prices have jumped 12.1 per cent and low-fat milk has increased by 13.5 per cent.
The acceleration in food prices over the past year is largely related to higher agricultural output prices.
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Mr Dawson said there were also price increases over the 12 months for Irish cheddar, which was 69c more expensive in September, and a pound of butter, which is up by 68c since last year.
Energy and fuel prices, meanwhile, increased by 2.3 per cent overall in the month, down significantly from the peak of the most recent spike in inflation in 2022.
In his budget speech on Tuesday, Minister for Finance Paschal Donohoe said inflation is expected to remain at around 2 per cent next year.
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The Central Bank of Ireland is forecasting annual Irish inflation to remain below the ECB’s 2 per cent target in 2025 before falling further in 2026.
Mr Pugh said: “We think headline inflation will remain above 2.5 per cent until the end of the year, when it will drop back towards 2 per cent.
“There are several factors now weighing on inflation; global commodity prices suggest the recent surge in food price inflation is near its peak, and lower energy prices will help drag the headline rate down.
Meanwhile, inflation in the euro zone has stabilised at around the European Central Bank’s (ECB’s) 2 per cent annual target this year.
Frankfurt has cut interest rates by two full percentage points in the year to June, but declined to cut again at its most recent monetary policy meeting in September.
Policymakers are now debating whether to cut again at the next governing council meeting at the end of the month, with ECB president Christine Lagarde recently noting that the outlook for inflation across the single currency area is more “uncertain than usual”.
