Irish inflation falls back to 5.1% as energy prices continue to drop

Headline inflation in the Irish economy fell to 5.1 per cent in October, down from 6.4 per cent in September, as declining energy prices anchored price growth, partially easing the pressure on households.

However, core inflation, which strips out volatile energy and food prices, remained elevated at 6.1 per cent and nearly three times the European Central Bank’s (ECB) target rate.

The latest Consumer Price Index (CPI), the official measure of inflation in the State, indicated that prices on a monthly basis rose by 0.3 per cent in October, down from a rate of 1.6 per cent in October last year.

The figures reflect a general easing of inflation from a high of more than 10 per cent this time last year and come in the wake of 10 consecutive interest rate hikes from the ECB.

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The reduction in price pressure in October came courtesy of a 0.5 per cent drop in restaurant and hotel prices and a 0.2 per cent fall-off in the cost of housing, water, electricity, gas and other fuels.

Within the latter category, the price of electricity was down by 1.8 per cent in October and by 5.3 per cent year on year, reflecting the steady decline in energy prices internationally.

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However the cost of mortgage interest was up by 1.7 per cent in October and by 41.6 per cent on an annual basis, reflecting higher borrowing costs in the wake of the ECB’s interest rate rises.

The most significant monthly price changes were increases in education which was 2 per cent, and a 1.1 per cent jump in transport costs. Education rose mainly due to an increase in the costs associated with participating in third level and second level education while transport was up primarily due to higher prices for airfares, diesel and petrol, the CSO said.