The latest figures on inflation show a mixed picture with an uptick in the US in June to 2.7% compared with 24% in May, and a continued decline in the EU. The year to year HICP for June for Ireland was 1.6% compared with 1.4% in May and for the Eurozone 1.6% compared with 1.9%. In terms of the CPI Ireland’s rate was 1.8% in June up slightly from 1.7% in May.

The reacceleration of inflation in the US comes at a bad time for President Trump who has become involved in a typically personalised campaign against the head of the Federal Reserve to force him to reduce interest rates. With the Fed believing that the impact of tariffs has yet to be felt, the latest CPI figures will stiffen the Fed’s resolve to hold interest rates at their present levels for some time to come.

In the EU the situation is completely different in respect of a better inflation picture and a much slower rate of activity than in the US. However, after eight consecutive reductions, and with uncertainty about tariffs, it seems the ECB will hold off further reductions for some months.

The second graph shows some detail on the Irish CPI for the period to June. After a pick up at the end of 2024, inflation in the main upward influences have mostly levelled off but with a sharp drop in Transport. That was due to a decline in prices for air fares and fuel. On the other hand Food is running well ahead of the average. Services, especially hospitality, are also rising rapidly and helping to offset negative influences elsewhere in the index.

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 recent 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.

Unless noted to the contrary all graphs are based on CSO statistics.