The latest inflation news is from the US and it is not good. The CPI in March was reported up 3.5% on March 2023. That was 0.1% point higher than expected and 0.3% higher than the rate of inflation in February. The cause of US inflation is the buoyant economy. Any idea that a cut in US interest rates is in the offing, as had been hinted, can be abandoned for the time being.

On the other hand, estimates of inflation for March from Eurostat show that the downward trend in inflation continues in Europe. It was 2.4% in March, gratifyingly down from 2.6% in the previous month. The news from Ireland was even better : 1.7% for March compared to 2.3% in February. These results would tend to support the idea of an earlier reduction in interest rates – June has been suggested – all the more so since a cause of inflation has been the sluggish European (and Irish) economy.

The above are ‘flash’ estimates of inflation compiled on the basis of Eurostat’s Harmonised Index of Consumer Prices (HICP). This is much lower than the Irish Consumer Price Index (CPI) mainly because it excludes some housing costs. The Irish CPI came out at 2.9% for March down significantly on the 3.4% in February. As the second graph shows Food and Husing (which includes utilities) are heading down, Transport slightly up.

The third graph gives some detail about consumer prices for energy and mortgage costs up to February. This segment has been volatile in the past and contributed a lot to the general level of inflation in Ireland. It can be seen that consumer energy prices are falling and the rate of increase in mortgage costs is declining (but not, course, the actual level of mortgage costs).

The general opinion among Irish macro forecasters is that inflation has been quite resilient in some sectors, especially the hospitality sector with services as a whole running at 5% inflation in recent months. But overall, a halving, at least, in the rate of annual inflation is expected in 2024 compared with last year.

With winter over, it is worth a look at the situation in the commodity markets for gas and oil. The very latest data shows a slight increase in oil and decline in gas commodity prices. Obviously with two wars in progress, and the possibility that one might spread to the Persian Gulf, and a tightly balanced market in gas, sustained increases are always possible. But the winter has passed without much sign of that. So far so good.