A SLOWDOWN IN the rate of inflation in Ireland has been welcomed by Finance Minister Michael McGrath.
An EU flash estimate indicates that prices rose in Ireland by 3.6% in the year to October, down from a rate of 5% in the 12 months to September.
Energy prices in Ireland fell by an estimated 0.3% in the month and decreased by 4.2% over the 12 months to October, according to the EU Harmonised Index of Consumer Prices (HICP).
Food prices are estimated to have grown by 0.2% in the last month and increased by 6.7% in the last 12 months.
The rate of inflation, excluding energy and unprocessed food, is estimated to have risen by 4.6% in a year.
The figures also indicated that prices in Ireland had increased by 0.2% between September and October.
There was an annual increase of 4.9% in the HICP for eurozone countries in the 12 months to October.
McGrath welcomed what he said was a “significant easing” to the rate of inflation.
“Annual HICP inflation is estimated at 3.6% in October, the lowest annual rate of increase since August 2021,” he said.
“Compared to this time last year, the inflation rate has fallen by almost six percentage points.
“The easing in inflation, driven by a fall in energy prices, is a welcome development for households and businesses throughout the country. As the fall in wholesale energy prices is passed on at the retail level, we can expect headline inflation to ease further in the months ahead,” he said.
McGrath said he was conscious that core inflation – excluding energy and food prices – is still elevated at just over 4.5%, stating that this largely reflects ongoing capacity constraints with the economy operating at full employment.
“Looking ahead, core inflation is also projected to ease albeit at a somewhat slower pace than the headline inflation rate.”
Speaking to The Journal in Brussels today, where Public Expenditure Minister Paschal Donohoe, as president of the Eurogroup, was briefing EU leaders and the head of the European Central Bank Christine Lagarde on the eurozone economy, said “the tone regarding inflation is definitely better”.
Giving a sense of the discussions around inflation, he said “it was definitely better than it has been before, because even though we have still some way to go to get inflation back to where it was, when I was in this room before, it [inflation] was 7% or 8%.
“Before that, it was 10% and for lots of economies now, it’s somewhere between 4% and 5%. So most economies have seen the rate of inflation half.
“But of course, what we’re all reflecting on now is a big part of why inflation has come down and what’s happened with the price of energy,” he said.
The question now is how the terrible events in the Middle East might impact inflation and the price of energy, for instance, he said.
“It’s really not clear what will happen,” said Donohoe, adding that is why the government decided to roll out three energy credits in the year ahead instead of two.
No one can say with absolute confidence what is going to happen with the price of energy in the year ahead, he said.
“The reason why we’ve maintained three energy credits, and not two, was just an anticipation that while we hope energy is going to come down, nobody can be certain. The reason we’ve gone for three energy credits is to recognise the risks that could happen with the price of energy,” said the public expenditure minister.
Political Editor Christina Finn reports from Brussels, with reporting by Press Association
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