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Ireland Inflation May 2023

Ireland: Harmonized inflation drops to lowest level since January 2022 in May

Harmonized inflation came in at 5.4% in May, which was down from April’s 6.3%. May’s reading represented the weakest inflation rate since January 2022. The figure was primarily due to a softer increase in prices for food and non-alcoholic beverages.

Annual average harmonized inflation fell to 8.1% in May (April: 8.4%). Meanwhile, consumer price inflation fell to 6.6% in May, from April’s 7.2%.

Finally, harmonized consumer prices increased 0.26% from the previous month in May, matching April’s reading. Both months’ results marked the weakest readings since January.

Our panelists see inflation cooling to 2.9% by Q4 2023. Despite being significantly above the 10-year pre-pandemic average of 0.4%, this inflation figure would be the lowest since Q2 2021. Price pressures will be dampened by a tougher base effect and government cost-of-living relief measures. That said, the government began to phase out its tax cut on diesel and petrol from 1 June. The phasing-out will be completed on 31 October, and will add upward pressure to inflation ahead. A key factor to watch is the 2024 budget, which will be presented this autumn; in early June, the Finance Minister said: “I expect that there will be some [cost-of-living] measures that we’ve had in the past that may be needed again.”

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