Inflation falls to 4.1pc in January after December blip

Recent trends in Ireland show services inflation slowing, which is not the case in the eurozone. Photo: PA

Sarah Collins

Irish prices were up 4.1pc in January, compared to the previous year, a slowdown on earlier in the year.

It is only the third time in over two years that inflation has fallen below 5pc.

The Consumer Price Index (CPI) came in at 4.6pc in the year to December last year, a slight increase on November, in what now looks to have been a blip following several months of a slowdown.

When compared month on month, inflation fell by 1.3pc in January, thanks largely to a 10pc decrease in clothing and footwear – though that was also down to falling sales volumes, the CSO said.

Transport prices also fell in the month, by 4.1pc, but alcohol and tobacco prices were up 2.4pc.

The overall inflation slowdown is due mainly to falling energy prices. Energy prices were down 13.2pc in the year.

Excluding energy and unprocessed food, the CPI rose by 5.3pc in the year to January.

The largest year on year price hikes were in were recreation and culture — due mainly to a 41.8pc rise int he price of package holidays — and restaurants and hotels (up 7.2pc).

There were also significant rises in the cost of mortgage interest repayments (up 31.8pc in the year), rents and services for the housing maintenance and repair.

The only division to see a fall in prices compared to last January was clothing and footwear.

The national average prices of a 2.5kg bag of potatoes has risen by €0.38, while spaghetti per 500g is up €0.12.

The price of two litres of full fat milk is down by €0.8 and a pound of butter is down by €0.7 when compared with January 2023.

The CSO has also announced an update to the list of over 600 goods and services it uses to measure Irish prices.

It is the first update since 2016, with the CPI basket now containing 612 items.

The CSO said it had also changed the weight or importance of certain items in the basket based on changing consumer spending habits.

Ireland’s changing tastes will see disposable e-cigarettes, smart watches, air fryers and vegan foods added to to the inflation basket used by the Central Statistics Office.

The CSO said Thursday that it has taken out land line phones, Swiss rolls, admission to nightclubs and digital cameras due to declining popularity.