Irish prices rise to a near 40-year high of 8.2 percent in May

Irish prices rose to a nearly 40-year high of 8.2 percent in May, according to a flash estimate by the EU.

The figure was slightly above the eurozone average and follows a 7.3 percent annual price increase in April, as measured by the EU’s harmonized index of consumer prices.

Prices in the 19-member currency zone rose a new record 8.1 percent in May, up from 7.4 percent in April, with energy prices accounting for well over a third of the rise.

Food prices rose 7.5 percent, while core inflation, which excludes volatile food and energy costs, rose 3.8 percent, nearly double the EU’s 2 percent target.

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Details on the breakdown of Irish inflation figures are not available. The National Statistics Office will publish its estimates later in June.

The last time the CPI was above 8 percent was the third quarter of 1984, when the index was released every three months.

The news comes after inflation in France, Germany and Spain hit all-time highs this week, increasing pressure on the European Central Bank (ECB) to hike rates more aggressively from this summer.

The European Central Bank’s chief economist Philip Lane told a Spanish newspaper this week that interest rates will rise gradually “in units of 25 basis points” as they move through July and September.

He said central bankers must “make the case for stronger moves”.

The ECB will hold its next rate-setting meeting in the Netherlands on June 9, although the first rate hike is not expected before July.

Despite rising prices, the Irish economy is expected to continue growing this year and next, growing almost twice as fast as the rest of the EU, while unemployment is at record lows.

The European Commission expects growth of 5.4 percent this year – down from the 6.4 percent forecast by the government in April – and 4.4 percent in 2023.

The International Monetary Fund is more optimistic, forecasting a 6 percent increase in gross domestic product this year – including the activities of multinational companies – and 5 percent in 2023.

The Fiscal Council, the state’s budget watchdog, said this week that higher inflation could hurt growth if it impacts wages and further price increases.

Its latest tax assessment report said the government is running out of money to offset the rising cost of living for government employees, retirees and welfare recipients, and will need to raise taxes or cut costs elsewhere from 2023.

That Irish Independent reported last week that new childcare subsidies and public transport fare reductions are expected to be cornerstones of a new living expenses package for next year’s budget.

The 2023 budget also targets lower healthcare costs at both the hospital and pharmacy levels, and there is a determination to reduce the cost of higher education. Irish prices rise to a near 40-year high of 8.2 percent in May

Fry Electronics Team

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