Inflation drops put ECB under pressure to cut rates
Energy prices in Ireland fell 5.8% month-on-month and by 9.9% compared to last year. Picture: PA
New EU inflation data for Ireland shows the annual rate of price increases declined to 2.3% during November as the cost of energy dropped significantly.
Similar drops were seen in Germany and Spain bolstering the case for the European Central Bank (ECB) to start cutting interest rates early next year as the eurozone economy teeters on the edge of a recession.
Between July and August, the eurozone's GDP declined by 0.1%.
According to the flash estimate of the EU Harmonised Index of Consumer Prices (HICP) — which allows the EU to compare inflation across the eurozone — annual inflation in Ireland stands at 2.3% down from 3.6% in October.
Energy prices in Ireland fell 5.8% month-on-month and by 9.9% compared to last year. However, food prices grew by 0.3% compared to October and by 6.3% compared to last November.
Finance Minister Michael McGrath said he expects retail energy prices to fall further over the coming months despite “significant volatility” in the market.
In Germany, inflation during November dropped to 2.3% from 3% in October with Spain’s inflation dropping to 3.2% from 3.5%.
The ECB’s target is to get inflation back down to 2%.
However, members of the ECB have repeatedly stated that now is not the time to start talking about cutting rates.
ECB Governing Council member Yannis Stournaras said that those betting on an April cut in rates are a “bit optimistic” adding he only expects such a move in the middle of next year.
