Inflation Dips to 3.6% in May; ECB Expected to Hike Rates

Ireland's inflation rate decreased slightly to 3.6% in May, down from 3.7% in April, which was the highest since early 2024. This dip was primarily due to a slowdown in energy inflation, though rising costs continue to impact consumers.

According to the Central Statistics Office (CSO), key drivers of inflation over the past 12 months included education charges, up 8.9% due to changes in third-level education charges from October last year, and clothing prices, which rose 7.4%. Housing, water, electricity, and gas costs increased by 7.1%. The only subsector to decline was furnishings, household equipment, and routine household maintenance, down 0.6%.

Excluding energy and unprocessed food, the core consumer price index increased by 2.9% annually. Monthly, the index fell 0.1% from April, with decreases in recreation, sport, and culture (-2.6%) and housing, water, and fuel (-1.1%). Rises were observed in clothing and footwear (+1.2%) and insurance and financial services (+0.8%).

These figures precede an expected quarter-point interest rate hike by the European Central Bank (ECB) today, the first since September 2023, aimed at controlling prices. RSM Ireland's chief economist, Thomas Pugh, predicts inflation will ease next month due to falling oil prices but will jump again in August as ECB hikes push up mortgage interest and utility bills. Mortgage inflation has already risen from 5.2% in February to 7.7%. The CSO also reported May 2026 national average prices: diesel at €1.99/litre (+33 cent year-on-year) and petrol at €1.87/litre (+17 cent).