Economics

Year to year inflation in the EU held at 2.2% in April, somewhat above the target, but not enough to dissuade the ECB from reducing interest rates which it duly did last month for the seventh time since last year. The situation in the US is not so clear since inflation is appreciably above 2%, the economy is running hot and there are uncertain implications for prices in the President's tariff policy. For the moment the Federal Reserve is holding its hand. In Ireland inflation increased from 2% to 2.2% driven by prices for food and services, especially hospitality . With demand brisk and unemployment low the economy will be lucky if May does not see a further acceleration in Irish inflation. sharp drop in US inflation was a positive feature of the inflation picture in recent days. But the possibility of price increases resulting from US tariff policy, has pushed expectations the other way. It seems unlikely that interest rates will be cut in the US anytime soon. Meanwhile, in Europe things are moving in the opposite direction with inflation falling and the economy still weak. In Ireland inflation picked up in March with the year to year CPI figure for March 2% up compared with 1.8% in February. An important factor has been a sharp increase in food prices.