The Central Statistics Office (CSO) has released updated figures showing that consumer goods and services prices rose by 7.7% in March compared to the same month last year. This is a decrease from the 8.5% rise recorded in the 12 months leading up to February. Despite this, consumers may not feel the easing of cost pressures just yet, as some common household items experienced dramatic annual price increases in March.
For instance, sugar prices rose by almost 37%, frozen fish by 27%, fresh whole milk by 24%, butter by 21%, and eggs by 20%. Food and non-alcoholic beverages prices collectively rose by 13% in annual terms. Additionally, consumers are still feeling the pinch of the ongoing energy crisis and rising mortgage interest rates due to hawkish monetary policies introduced by the European Central Bank (ECB) to curb inflation.
Electricity prices rose by 63% annually, while gas costs surged by an astounding 86%. Higher mortgage interest repayments also increased by 35%. In March, consumer prices rose by 1.1% on a monthly basis. The most significant monthly price increases were recorded in the transport and hospitality sectors, which rose by around 2%. The increase in transport prices was mainly due to higher airfare costs.
The CSO release reflects harmonised inflation figures, which facilitate easy comparison of price pressures across the European Union (EU). In contrast, eurozone inflation dropped moderately to an estimated 6.9% in March, compared with 8.5% in February. This downtrend was likely caused by the steep decline in wholesale energy costs from the record levels they reached after Russia invaded Ukraine last year.
Despite the slowdown in consumer prices, European Central Bank (ECB) hawks are likely to push ahead with more interest rate hikes this year. “The current information on underlying inflation pressures suggests that it will be appropriate to raise rates further beyond our March meeting,” said ECB chief economist Philip Lane in Dublin recently. “Exactly what we do in May will be very data dependent,” he added.