Irish inflation stable in May despite higher transport and hotel prices

Headline inflation in the Irish economy remained stable in May, the Central Statistics Office (CSO) said on Thursday, despite an uptick in the rate of consumer price increase from April to last month driven by rising transport, restaurant and accommodation prices.

The statistics agency’s latest consumer price index (CPI) indicates prices were 2.6 per cent higher on average in May compared with the same month last year with the annual rate of inflation remaining unchanged from April.

On a monthly basis, however, prices increased by 0.5 per cent in May compared with a month-on-month rate of 0.2 per cent between March and April, the CSO said.

The figures showed the quickening pace of inflation in the month was largely driven by transport costs, including air fares, which increased by 1.5 per cent between April and May, and restaurant and hotel prices, which jumped by 1.4 per cent.

On an annual basis, however, May was just the seventh month since September, 2021 that headline growth in the CPI was below 5 per cent, the CSO said as inflation in the Republic continues to fall from the highs seen in the months after Russia’s invasion of Ukraine, which triggered a spike in global energy prices.

“It is also the seventh consecutive month where the inflation rate was lower than 5 per cent,” said Anthony Dawson, statistician in the CSO’s prices division.

In the 12 months to the end of May, transport prices saw the largest increase, jumping 6.7 per cent, with air fares up 6.6 per cent in the year and 8.5 per cent in the month of May alone. The CSO said the increase in transport prices reflected a sharp climb in the price of diesel, up 17.5 per cent in the year, and petrol, which has increased 14.5 per cent since May, 2023 amid a surge in global oil prices.

Restaurant and hotel prices had jumped 4.7 per cent on an annual basis by the end of May, the CSO said, largely due to increases in the cost of accommodation and higher prices for alcoholic drinks and food consumed in licensed premises.

Energy prices, however, continued to decline, with natural gas prices having fallen by 19.6 per cent since May last and electricity prices down 20.7 per cent over the same period.

Rents, including those charged by private landlords as well as local authorities, soared 9.1 per cent in the year with mortgage interest payments up 18.5 per cent in the year and 0.5 per cent in the month as banks continued to pass on the cost of higher central bank interest rates.