Annual inflation continued to slow in January, falling from 8.2% in December to 7.7%, according to the latest flash estimates for the EU Harmonised Index of Consumer Prices (HICP) issued by the Central Statistics Office.

In a new departure, the CSO has got ahead of Eurostat's monthly HICP release for the eurozone. The Eurostat release is due on February 1.

The Consumer Price Index (CPI) is the official measure of inflation for Ireland and is published monthly by the CSO.

The CPI release for January 2023 will be published on 16 February 2023 and the final results of the HICP for Ireland for January 2023 will be published as part of the CPI release.

Energy prices have been responsible for both high inflation over the past year and the recent turnaround, having risen 33.1% since January 2022 and decreased 0.1% in the last month.

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Excluding energy prices, annual HICP inflation in Ireland is 5.2%. Overall, the Irish figure compared to annual inflation of 9.2% in the eurozone for the same period, and prices in Ireland have declined 0.8% over the past month.

The slowdown also follows the European Central Bank's decision to raise interest rates from 0% to 2.5% since July 2022, with all of Ireland's retail banks having raised mortgage rates at least twice as a result.

Inflation across the euro area remains well above the ECB's 2% target and Christine Lagarde, the president of the ECB, said the regulator would "stay the course" and continue to raise rates in the coming months.

Markets expect that the ECB will raise rates by 50 basis points at its next two policy meetings, taking place this week and in March.

However, pressure will mount on the ECB to dial back interest rate pain if inflation has peaked and is falling across the eurozone.

(Pic: Getty Images)