Minister for Finance Michael McGrath: 'The good news is that inflation has now peaked.' Photograph: Kenzo Tribouillard/AFP via Getty ImagesInflation in the Irish economy will fall “much more rapidly than previously assumed”, averaging 4-5 per cent this year, thanks to falling energy prices, Minister for Finance Michael McGrath has said. The Department of Finance had previously anticipated a rate of 7 per cent for this year.
“The good news is that inflation has now peaked and is falling back,” Mr McGrath told the Irish Tax Institute’s annual dinner at the Clayton Hotel in Dublin, noting his department had recently revised down its forecasts “At the time of the budget,we anticipated that the annual rate of inflation for this year would average around 7 per cent, with the annual rate falling to 4 per cent in the final quarter of the year,” he said. “These were based on the assumption of oil and natural gas prices at the time of the budget.
His predictions, however, come as worrying economic data coming out of the US show the personal consumption expenditures price index, the Federal Reserve’s preferred gauge of inflation, shot up 0.6 per cent last month after gaining 0.2 per cent in December. The news sent markets into reverse and appeared to rule out the prospect of interest rate cuts this year.
IrishTimes Think FF/FG will fall faster
IrishTimes I'll believe it when I see it.