Surging energy prices drove inflation in Ireland to a three-year high of 3.9 per cent in September. This was up from 3.4 per cent the previous month and comes as US president Donald Trump rejected Iran’s latest proposal to reopen the Strait of Hormuz.
The latest Harmonised Index of Consumer Prices (HICP) indicated that prices rose at an annualised rate of 3.9 per cent in the 12 months to September and by 0.2 per cent on a monthly basis.
The main driver of the increase were energy prices, which rose by 2.9 per cent in the month and by 15.3 per cent over the 12 months.
Motorists have been the worst hit by the latest spike in oil prices, with petrol and diesel prices breaching €2 and €2.15 a litre in many forecourts. Before the Iran crisis, both fuels averaged €1.70 a litre.
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The impact on food prices has yet to hit, with latest HICP indicating that food prices were unchanged on the previous month and up by just 0.3 per cent in the last 12 months.
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There is typically a lag time before higher energy costs translate into higher food prices.
Excluding energy and unprocessed food, the underlying HICP is estimated to have risen by 2.8 per cent since September 2025.
Eurostat will publish flash estimates of inflation from the euro zone as a whole on Friday.
The latest estimate of price growth comes at a pivotal moment for the global economy, with peace efforts between the US and Iran seeming to go nowhere.
Iran’s effective closure of the Strait of Hormuz earlier in the year halted global shipments of oil and gas through the channel, triggering a sudden surge in energy prices.
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“The impact of a volatile energy market has been laid bare by Ireland’s latest inflation figures, the first estimates for September,” Kate English, chief economist at Deloitte Ireland, said.
“As we head into winter, there will be greater energy demand, so it is difficult to see energy costs doing anything other than remaining elevated.”
English said energy prices in the State had risen “by 2.9 per cent in the last month alone, reflecting higher prices in energy markets, namely oil, that had dissipated somewhat over the summer”.
She also noted that while food prices remained unchanged, there is a lag between fuel price increases and subsequent food price increases of typically eight-10 months, based on Central Bank of Ireland estimates.
“Energy prices rose significantly back in March, which means that the second-round effects [in the form of higher food prices] may begin to rear their heads from late October onwards.”
