Economics: Latest Irish CPI data to show inflationary pressures still subdued

The domestic economic focus on Thursday turns to the consumer price index for June, which will be released by the Central Statistics Office later this morning.

The annual inflation rate came in at 0.4% in May as against -0.4% in April and 0.2% in March. Prices were up 0.6% in the month, compared with a monthly fall of 0.2% in April.

Meanwhile, the HICP rate, the measure used for EU comparative purposes, was also up 0.6% in the month, giving an annual inflation rate on this basis of 0.7%, as against
-0.1% in the previous month.

The main monthly changes affecting the CPI in May were increases in the cost of petrol, diesel, air fares and hotel accommodation. The price of alcoholic drink was also higher in the month. Against that, health insurance premiums decreased on April.

Although the annual inflation rate should pick up in the coming months, inflationary pressures in Ireland as measured by the headline consumer price index are in general likely to stay well contained for the immediate future.

Ireland’s average inflation rate was 0.4% in 2017, up from 0% in 2016. While the average for the first five months of 2018 was only 0.2%, the average for the year as a whole should pick up modestly to around 0.5%.

For June, we are expecting a monthly rise of 0.2% in the headline CPI, pushing the annual inflation rate up to 0.5%. On the HICP basis, a monthly increase of 0.2% is also envisaged, giving a year-on-year rise of 0.8%.

Alan McQuaid (12/7/18)
Economist