Ireland’s inflation rate eased slightly in January, rising 2.7% year-on-year, according to the latest figures from the Central Statistics Office (CSO). This represents a deceleration from the 2.8% annual increase recorded in December and the 3.2% peak observed in November.
The moderation in price increases offers a glimmer of relief for consumers facing persistent cost-of-living pressures, though inflation remains significantly above the 1.9% recorded in January 2025. The slowdown in Ireland mirrors a broader trend across the Eurozone, where inflation fell to 1.7% in January, down from 2% the previous month.
While energy prices remained broadly stable and transport costs experienced a slight decline, key areas continued to drive inflationary pressures. Food prices rose by 3.9% over the year, while insurance and financial services saw an increase of 6.1%. These figures highlight the ongoing impact of global supply chain dynamics and domestic economic factors on household budgets.
A deeper dive into the data reveals significant price variations across different sectors. Education services experienced the most substantial increase, with prices rising 8.9% in the 12 months to January. This surge is attributed to increased costs associated with third-level education, which came into effect in October 2025. Clothing and footwear also saw a notable price hike, increasing by 7.3% over the same period.
Conversely, furnishings, household equipment, routine household maintenance, and transport were the only categories to experience price declines, falling by 0.6% and 0.1% respectively. This suggests a cooling in demand for these goods, potentially reflecting broader economic uncertainty.
The CSO’s National Average Prices study for January provides a granular view of price movements for specific goods. Consumers faced higher prices for essential items such as Irish cheddar (+45 cent per kg), a pound of butter (+34 cent), 2 litres of full-fat milk (+6 cent), and a kilogram of sirloin steak (+€4.68). However, some items saw price reductions, including a 2.5kg bag of potatoes (-22 cent) and an 800g loaf of brown sliced pan (-1 cent).
Looking ahead, economists anticipate a continued moderation in inflation throughout 2026. Gerard Brady, Chief Economist at Ibec, noted that while inflation peaked at 3.2% in November 2025, it has “moderated quickly and will continue to do so in the year ahead.” Ibec now forecasts an overall inflation rate of 2.3% for 2026.
However, challenges remain. Thomas Pugh, Chief Economist at RSM Ireland and RSM UK, cautioned that the recent appreciation of the euro against the dollar and sterling – rising 13% and 5% respectively – has helped to weigh on import prices, but the recent rise in oil prices will likely translate to higher fuel costs in the coming months. He also anticipates that domestically generated price pressures will keep inflation above 2.0% for much of 2026.
The monthly figures offer further insight into the evolving inflationary landscape. Prices fell by 0.9% in January, returning to levels last seen in July 2025. This decline was primarily driven by reductions in clothing and footwear (-7.2%) and recreation, sport, and culture (-3.1%). Conversely, alcoholic beverages and tobacco (+2.7%) and health (+0.3%) experienced modest price increases.
Chris Beauchamp, Chief Market Analyst at IG, described the slowing annual inflation and sharp month-on-month drop as “good news for the economy,” confirming that November’s peak was likely a temporary phenomenon. He noted that the trend mirrors similar data released in the UK, suggesting easing price pressures on both sides of the Irish Sea.
The latest inflation data will be closely watched by the Central Bank of Ireland as it considers future monetary policy decisions. While the easing of inflationary pressures provides some room for maneuver, the persistence of underlying price increases suggests that a cautious approach will be warranted. The balance between supporting economic growth and maintaining price stability will remain a key challenge for policymakers in the months ahead.
The impact of these price changes is felt across various sectors. The hospitality industry, for example, has seen prices for alcoholic drinks and food contribute significantly to overall inflation. Meanwhile, rising rents, mortgage interest rates, and electricity costs continue to put pressure on household finances. The education sector’s substantial price increases are likely to impact students and families planning for higher education.
