Rising energy prices push inflation up to 3.9% - CSO

In August, Ireland's annual consumer price inflation reached its highest level in three years, hitting 3.9%, according to a flash estimate from the Central Statistics Office (CSO). This increase was primarily driven by a surge in energy prices. The CSO forecasted energy prices to rise by 0.2% month-on-month from August to September, while over the past year, energy costs have climbed by 15.3%.

Food prices, on the other hand, remained the same in the month of September and increased by 0.3% since the same time last year. Excluding energy and unprocessed food, annual price growth reached 2.8%, up from 2.6% in August.

Kate English, Deloitte Ireland's chief economist, anticipates that as winter approaches, energy demand will continue to grow, making it unlikely for energy costs to decrease. She pointed out that energy prices surged by 2.9% in the previous month alone, reflecting higher prices in oil markets that had slightly eased during the summer.

English also noted that while food prices stayed unchanged in September, there is typically an eight to ten month lag between fuel price increases and subsequent food price hikes, based on estimates from the Central Bank of Ireland.

English suggests that the effects of higher food prices may begin to appear from late October onwards, as energy prices rose significantly in March. She emphasized that inflation appears to be persistent and will negatively impact individuals, households, and businesses. However, she acknowledged that while prices have risen, the rate is lower than initially anticipated. Ultimately, the passage of time will determine the extent of secondary and indirect impacts resulting from the prolonged period of inflated energy prices.