Inflation: Big Jump in the Irish Index in September

The latest figures on inflation for Ireland released by the CSO show a sharp jump in inflation in September. The Harmonised Index of Consumer Prices, the EU’s measure of inflation, shows a year to year increase of 2.7% for Ireland. This compares with an increase of 1.9% in August and is the largest monthly increase since January 2024. The index also edged up from 2% to 2.2% in the Eurozone. The Consumer Price Index, the measure favoured by the CSO, and more generally quoted, will not be available for a couple of weeks. It has generally been a bit higher than the HICP suggesting that it might be around 3%. Surging food prices are the main reason for the increase.

In the US inflation to August was 2.9% compared with 2.7% in July. This was accompanied by an increase in the unemployment rate to 4.2%, the highest for months. This was enough to tilt the Fed towards a cut in interest rates of 0.25% in its latest meeting. Further moves are still in the balance.

The second graph shows some detail on the Irish CPI for the period to August. The main upward influence is Food which rose by 5.1% in the year to August continuing an upward trend since mid 2024. Housing and Services have risen more moderately but still slightly above the average. The main offset bringing the overall index down to an increase of 2% has been transport which fell by, 2.3%.

Oil and gas are critically important commodities and major influences on prices. In most of 2024, gas had been increasing in price while oil has been falling. But since the start of this year until recently prices of both have been falling. Despite a slight uptick in recent months, reversed since the end of July, trends indicate that the situation in the Gulf appears to have had a relatively minor impact on prices. Indicators of weak demand in China, the uncertain impact of Trump’s tariff policy and the decision by Saudi Arabia to facilitate lower oil prices, are the main influences.