Economics: Irish annual inflation rate projected to have picked up to 1.0% in September

Ireland’s annual inflation rate moved back into positive territory in August, having been negative in the previous two months. Furthermore, base effects should see the inflation rate picking up sharply over the rest of 2017, possibly ending the year close to 2.0%.

The annual inflation rate came in at 0.4% in August as against -0.2% in July and -0.4% in June. Consumer prices were up 0.4% in the month, compared with unchanged monthly prices in July. Meanwhile, the HICP rate, the measure used for EU comparative purposes, was also up 0.4% in the month, giving an annual inflation rate on this basis of 0.4% too, as against -0.2% in the previous month.

The main monthly changes affecting the CPI in August were increases in the cost of hotel accommodation and food/alcohol consumed in restaurants, cafes etc.

Ireland’s average inflation rate was 0% in 2016, compared with -0.3% in 2015 and 0.2% in 2014. Based on the figures for the first eight months of the year and assuming a pick-up in inflation over the rest of 2017, it looks like the average for the year as a whole will be around 0.7%.

September is forecast to show both the headline CPI and the HICP rising 0.2% in the month and 1.0% in the year.

Alan McQuaid
Economist