Irish rising inflation is 9.6% despite rising prices throughout the euro zone

IRELAND: Prices in Ireland rose by an estimated 9.6 per cent in the year to July, higher than the euro area average, according to a flash estimate from Eurostat, the statistical office of the European Union.

Eurostat estimated that Ireland’s harmonised index of consumer prices (HICP) measure of inflation rose an estimated 0.4 per cent in the month of July. However, the annual rate of inflation remain unchanged from June at 9.6 per cent.

The estimates are subject to revision when the figures are finalised next month. But should the 9.6 per cent estimate be affirmed, July would be the first month in which the price index did not increase month to month since the start of 2022.

Harmonised Index of Consumer Prices

The Central Statistics Office produces the monthly consumer price index (CPI) and the HICP separately (CSO). The July data set will be released the following month. According to the most recent CPI, prices increased 9.1% in the year to June.

According to Eurostat, annual inflation in the euro area is predicted to increase to 8.9% in July 2022 from 8.6% in June. This is another record high and is significantly higher than economists had predicted. This puts pressure on policymakers at the European Central Bank to continue tightening monetary policy in the coming months.

For the first time in over a decade, Frankfurt increased policy interest rates last week in an effort to tame the single currency area's raging inflation.

Ireland's annual HICP rate for July is above the Eurozone average but also in the centre of the pack, according to a statement from the CSO. Eight of the 19 countries in the euro area experienced yearly growth rates that were less than the estimated 9.6% for Ireland, while ten other nations experienced greater rates. Malta had the lowest estimated annual inflation at 6.5%, while Estonia had the highest at 22.7%.

Anthony Dawson, a statistician for the CSO, commented on the Eurostat report, saying: "Looking at the components of the flash HICP in Ireland for July 2022, energy is expected to be down 1.6% in the month but up 50.4% from July 2021. Overall, energy prices in the euro zone increased by 0.4% in a single month and by 39.7% annually.

The Central Bank of Ireland stated in its most recent quarterly bulletin, released earlier this month, that it expects annual inflation to reach a peak of 9% during the next several months before starting to drop.

However, despite concerns that a recession might be on the horizon, according to separate data provided by Eurostat on Friday, the majority of euro zone economies grew robustly in the first half of the year.

The value of all finished goods and services produced inside the economies of the single currency area, known as the euro area's gross domestic product (GDP), increased by 0.7% in the three months to the end of June, up from 0.5% between January and March.

The second quarter saw economic growth in Spain (+1.1%), Italy (+1%), and France (+0.5%), possibly aided by summer travel and tourism. While the economies of Latvia, Lithuania, and Portugal all had second-quarter declines, by the end of June 2022, all three had experienced a rapid recovery. Since June 2021, the economies of Portugal, Latvia, and Lithuania have expanded by a combined 6.9 percent, 2.8%, and 2.5%.

Paolo Gentiloni, the commissioner for the eurozone's economy, said the growth results were "better than projected."

He noted in a tweet that Italy and Spain performed very well. "We are not in a recession, but there will be uncertainty for the foreseeable future, and inflation is still at record highs."