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 while in the UK the rate remained steady at 3.8%. The Irish Consumer Price Index, the measure favoured by the CSO, and more generally quoted, also shows an increases of 2.7%, up from 2% in August. Surging food prices are the main reason for the increase with a sharp rise in Transport from a decline in August to an increase of 2.1% in September.

In the US inflation to September was 3% compared with 2.9% in August. The increases were across the board and were influenced by tariffs. The increase was slightly less than expected and so taken as a sign that the Fed will cut interest rates at its next meeting.

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.

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. 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.