Average prices, as measured by the Consumer Price Index, were 0.8% higher in July compared with July 2017. The monthly increase was double the 0.4% recorded in June.

The most notable annual changes changes in the year were increases in Housing, Water, Electricity, Gas & Other Fuels (+5.4%), Alcoholic Beverages & Tobacco (+2.8%), Transport (+2.2%) and Restaurants & Hotels (+1.8%).

There were decreases in Furnishings, Household Equipment & Routine Household Maintenance (-3.9%), Miscellaneous Goods & Services (-3.2%), Food & Non-Alcoholic Beverages (-2.1%) and Communications (-2.0%).

According to the CSO, Housing, Water, Electricity, Gas & Other Fuels rose mainly due to higher rents and an increase in the price of home heating oil, electricity and gas.

Restaurants & Hotels increased primarily due to higher prices for alcoholic drinks and food consumed in licensed premises, restaurants, cafes etc. and an increase in the cost of hotel accommodation.

In Association with

Transport rose mainly due to higher prices for diesel and petrol which was partially offset by a decrease in air fares.

Miscellaneous Goods & Services decreased primarily due to lower health and motor insurance premiums and lower prices for appliances, articles and products for personal care.

Food & Non-Alcoholic Beverages fell due to lower prices across a range of products such as meat, vegetables, bread and cereals and jam, honey, chocolate  and confectionery.

Furnishings, Household Equipment & Routine Household Maintenance decreased mainly due to the reduced cost of non-durable household goods, furniture and furnishings, household textiles and glassware, tableware and household utensils.

The sub index for Services rose by 1.0% in the year to July, while Goods increased by 0.2%.  Services, excluding mortgage interest repayments, increased by 1.1% in the year since July 2017.

The CPI excluding tobacco increased by 0.6% in the year.  The CPI excluding mortgage interest increased by 0.8% in the year.

Harmonised Index of Consumer Prices

Inflation as measured by the EU Harmonised Index of Consumer Prices (HICP) increased by 1.0% compared with July 2017.

Alan McQuaid, economist with Merrion Capital, commented that overall inflationary pressures in the economy remain fairly muted. “That said, the annual inflation rate has started to pick up and will likely continue to do so in the coming months, with every chance that due to base effects it will be running at 1.5% or higher in December,” he added.

“Ireland’s average inflation rate was 0.4% in 2017, up from 0% in 2016. Although the average for the first half of 2018 was only 0.2%, the average for the year as a whole should pick up to around 0.7%,” said McQuiad.

“The more immediate worry on the domestic inflation front centres around increased wage demands, particularly in the public service. As the labour market approaches full employment levels, wage growth will pick up. In its most recent Quarterly Economic Bulletin, the Central Bank forecast average compensation per employee growth of 3.1% in the 2018-2019 period, well above the increase of 0.8% recorded in 2017."

International Comparisons

Consumer price inflation in other countries is much higher than in Ireland, averaging 2.8% for June across the OECD area. In the year to June 2018, the annual inflation rate was 2.5% in Canada, 2.9% in the United States, 2.0% in France, 2.3% in the UK and 2.1% in Germany.

Annual inflation in the euro area, as measured by the HICP, was 2.0% in June. Excluding food and energy, euro area inflation was 0.9%.

Among the G20 emerging economies, annual inflation is 4.4% in Brazil, 29.5% in Argentina and 4.4% in South Africa.