Irish CPI inflation likely to rise towards 3.5-4% in March
Equity markets have seen a fresh sell-off this morning as investors have reacted to President Trump’s ultimatum to Iran that he will strike energy infrastructure, should traffic through the Strait of Hormuz fail to resume. At the time of writing most European equity markets are down by at least a further 2%. Despite the conflict escalating futures contracts still point to Brent crude oil prices falling from $113 per barrel presently, to $89pb by end-2026. However, the past couple of days has seen marked upward pressure on swap rates, options now implying three hikes from both the Bank of England and ECB by end-2026, most likely starting on April 30th.
Turning to Ireland, we estimate the first round impact of higher petrol, diesel and home heating oil prices should be sufficient to push up CPI inflation from 2.7% in February, towards 3.5-4% through March and April. Government action to cut excise duties may dilute some of the upward impact onto CPI inflation next month. Ireland’s elevated household savings rate at 12% in Q4 2025 indicates many households will have room to sustain real spending despite energy price hikes. That said, the clear risk to our forecast for Irish consumer spending to grow by 2.3% in real terms in 2026 now lies to the downside, given the pressure on real incomes.
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