Irish inflation at 2.4% as Middle East conflict threatens price shock

DCM Editorial Summary: This story has been independently rewritten and summarised for DCM readers to highlight key developments relevant to the region. Original reporting by Irish Times, click this post to read the original article.

Prices in the Irish economy rose by an average 2.4 per cent in the 12 months to the end of February, according to a flash estimate for inflation published by the Central Statistics Office (CSO).

The latest estimate of price growth comes at a pivotal moment for the global economy with conflict in the Middle East causing a sudden spike in energy prices.

The CSO’s Harmonised Index of Consumer Prices (HICP) for February indicated that energy prices in Ireland are estimated to have gone up by 0.4 per cent last month and were up by 0.1 per cent over the past 12 months.

This lift in energy-price inflation could, however, be turbocharged in the coming months if renewed conflict in the Middle East disrupts the flow of oil and gas from the region.

Brent crude, the international benchmark, has surged by as much as 13 per cent since Saturday’s attack while European gas prices have jumped 24 per cent.

Activity in the Strait of Hormuz, the narrow waterway at the mouth of the Gulf through which a fifth of the world’s oil and gas flows, has slowed to a near standstill following the strikes.

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The CSO said the HICP for Ireland was estimated to have risen by 2.4 per cent in the 12 months to February and increased by 0.7 per cent since January.

This compares with HICP inflation of 2.5 per cent in Ireland in January and an annual increase of 1.7 per cent for the euro zone as a whole in January. The elevated nature of inflation at present is demonstrated by the fact that the HICP rose by 1.3 per cent in the 12 months to February 2025.

Eurostat will publish a flash estimate of inflation for the euro zone for February on Tuesday.

Food prices in Ireland are estimated to have risen by 0.1 per cent in the past month and increased by 3.4 per cent in the past 12 months. Food prices have been the single biggest pressure point on households for the past year.

Alex Deaton, dealer at global financial services firm Ebury (Ireland), said inflation appears “to be back on the march”.

“Across the bloc, inflation is mostly back at target levels, prompting expectations that the ECB (European Central Bank) will hold rates through 2026, but with the Iran crisis sparking fresh geopolitical uncertainty, trade disruption and a surge in oil prices, inflation could creep back once again,” he said.

“Moreover, planned increases in public capital spending from the Government could also fuel domestic inflationary pressures in the short term.

“Higher input costs and increased uncertainty would create a more challenging environment for Irish businesses, particularly against an already restrictive global trading backdrop,” he said.