Lower energy prices drive down Irish inflation in March

The Irish economy experienced a decline in inflation in March due to the lower energy prices. This news comes as a sigh of relief for Irish households, as rising inflation can lead to an increase in the cost of living. The decrease in inflation is being attributed to lower energy costs, which have significantly impacted the overall consumer price index. In this article, we will delve deeper into this development and analyze the factors responsible for it.


In March, headline inflation in the Irish economy decreased to 7%, mainly due to lower energy costs worldwide. This decrease is a positive trend from the previous month’s annualised rate of 8.1%, and the Economic and Social Research Institute predicts that Irish inflation could fall to 4% this year. The Central Statistics Office’s latest EU Harmonised Index of Consumer Prices (HICP) for the Republic showed a 7% rise in prices over the past year and a 0.9% increase in exchange for monthly pricing data. Energy prices dropped by 0.9% in March, although they remained up 11.7% over the year. Conversely, food prices continued to rise, increasing by 1.1% in March and 13.5% over the past year, increasing the annual cost of a family’s grocery shopping by over €1,000. Transport costs increased by 2.2% per month and by 0.6% per year for the same period. The HICP, which excludes energy, has risen by 6.3% since March 2022, compared to 5.8% in the previous month. Policymakers are concerned that the decrease in headline growth rates is not followed by reduced core or underlying inflation, leading to higher pricing in some areas. As the European Central Bank increased interest rates by 0.5% earlier this month to reduce inflation, the bank’s Chief Christine Lagarde said “We are seeing some slight improvement in certain areas of underlying inflation, but frankly, not a lot.” This interest rate hike was part of the bank’s aggressive monetary tightening that began in Frankfurt in July. Ms Lagarde said that the pace of monetary tightening would depend entirely on the data from this point on. While the HICP measures price growth differently than the consumer price index (CPI) of the CSO, which reported 8.5% inflation in the Republic in February, up from 7.8% a month prior, the HICP data informs Eurostat’s eurozone inflation estimate to be published on Friday.


In conclusion, the recent drop in Irish inflation in March is a welcome relief for consumers and businesses alike. The lower energy prices have played a significant role in this decline, providing some relief on household bills and reducing costs for many companies. While uncertainty remains in the global economy, the outlook for inflation in Ireland seems to be positive, giving hope to those who are feeling the pinch in their wallets. As we move forward, it will be interesting to see how this trend continues and what it means for the wider economy.