Ireland’s low inflation rate over the past decade had contributed to reducing Ireland’s relative price level, which has been historically high. However, since 2021, as inflation has risen to record levels in most countries, Ireland can no longer rely on this lower inflation rate to bring down its relative price levels.

While still elevated, the rate of inflation has fallen by one third from a peak of 9.2% in October 2022. The available data would suggest that inflationary pressures have begun to ease, both in Ireland and internationally. This change reflects a variety of factors, including a feed-through from falling prices on global markets and the impact of domestic competition (as sellers strive to maintain, or grow, market share). The latter is reflected in the recent, and well-publicised, move to reduce grocery prices in the Irish retail sector.

Given the current high and sustained level of upward price pressures, and what these price pressures mean for consumers, enterprises, and Government, this NCPC Bulletin endeavours to explore movements in both the CPI and the Producer Price Index (PPI) over recent years.  It explores recent inflationary trends in the PPI and the CPI to look at how both businesses and consumers are affected, and it looks at the relationship between these measures.

The Bulletin compares PPIs across a range of economies to explore differences in trends in recent years, paying particular attention to the PPI facing the food manufacturing sector.  In the case of the CPI, the Bulletin identifies the drivers of change and then analyses the change in the category weights to identify those items that have recently acquired greater importance in the index.

The bulletin can be accessed here.

The accompanying press release can be accessed here.