Irish inflation unchanged at 3.4% amid uncertainty of Middle East peace deal

Headline inflation in the Irish economy remained elevated at 3.4 per cent in July, unchanged from the previous month, keeping the squeeze on households.The latest Consumer Price Index (CPI), the State’s official measure of price growth, comes amid uncertainty over whether a US-Iran peace deal can be achieved with both sides still engaging in a war of words.The CPI figures indicated that consumer prices here rose by 0.1 per cent between June and July . This compared to an increase of 0.3 per cent between May and June.The category that had the biggest impact was housing, water, electricity, gas and other fuels, which accounted for 1.2 per cent of the 3.4 per cent headline rate.READ MOREPrices in this category rose by 7.7 per cent on annual basis “primarily due to a rise in the cost of rents, mortgage interest repayments, electricity and home heating oil,” the Central Statistics Office said.[ Inflation holds steady in July as energy prices fellOpens in new window ]Private housing rents were up by 4.5 per cent on an annual basis while the cost of mortgage interest was up by 10 per cent annually.Rising oil prices internationally saw the cost of domestic electricity here rise by 8.1 per cent over 12 months while home heating oil was up by a significant 28 per cent.The European Central Bank lifted interest rates for the first time in nearly three years in June in response to the inflationary environment. With euro zone inflation accelerating to 2.9 per cent in July, another rate hike is expected in September.Inflation here has moderated from 3.7 per cent in April to 3.4 per cent last month.The Irish figures show the cost of petrol and diesel fell by 4.1 per cent and 6.4 per cent respectively in July as oil prices softened. However, they were both up over 3 per cent on an annual basis.This was partially offset be an increase in the cost of air fares, which jumped by more than 11 per cent.The cost of recreation, sport and culture also rose by 2.7 per cent in the month, which was linked to higher costs for package holidays.“Despite a stabilisation in inflation this month, with the rate holding at 3.4 per cent, inflation will remain a key concern for consumers as we head into the autumn and winter months,” Deloitte Ireland chief economist Kate English said. “Electricity prices increased 3.7 per cent in the month, bringing the annual rate of inflation (8.1 per cent) to its highest rate since late 2023. “While energy prices remain elevated, they continue to be significantly lower than 2022 and 2023 levels. That said, as developments continue in the Gulf region and heat waves persist in Europe, energy price uncertainty will be a key feature for Ireland and Europe this winter,” she said.Gas reserves are also still lower than their average rate for this time of year, she added.