In June 2025, Ireland's inflation rate accelerated to 1.6%, primarily driven by higher food prices, as data indicated a 4.3% increase in food costs over the past year. While energy prices dipped by 1.8%, the combination of economic factors signaled challenges for households. The European Central Bank (ECB) perceives inflation as mostly contained, but the sensitivity of consumer sentiment to food prices is evident. Anticipation surrounding euro-area inflation data suggests a general uptick, with ECB officials indicating that long-term inflation targets may stabilize around 2% in the coming years.
The annualised EU Harmonised Index of Consumer Prices (HICP) for Ireland rose by 1.6pc in the 12 months to June 2025, highlighting ongoing inflation pressure.
Despite recent inflation pressures in food prices, overall inflation remains dramatically below the double-digit levels seen after the Covid pandemic and geopolitical tensions.
ECB chief economist Philip Lane noted the process of bringing inflation back to target is 'largely completed,' signifying stability despite higher food prices still impacting households.
The upcoming euro-area inflation data is expected to show an acceleration, indicating a change in economic trends and consumer sentiment within the region.
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