Press release
Minister McGrath welcomes the easing in inflation and notes the release of flash GDP estimates
Published on
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Published on
Last updated on
The CSO today (27 October) published its ‘flash’ estimate for inflation in October as well as an early estimate of GDP for the third quarter of the year.
Commenting on the figures, Minister for Finance Michael McGrath said:
“Inflation data published today show a significant easing in the headline rate of inflation. Annual HICP inflation is estimated at 3.6 per cent in October, the lowest annual rate of increase since August 2021. Compared to this time last year, the inflation rate has fallen by almost 6 percentage points.
“The easing in inflation, driven by a fall in energy prices, is a welcome development for households and businesses throughout the country. As the fall in wholesale energy prices is passed-on at the retail level, we can expect headline inflation to ease further in the months ahead.
“I am conscious that core inflation –excluding energy and food prices – is still elevated at just over 4½ per cent. This largely reflects ongoing capacity constraints with the economy operating at full employment. Looking ahead, core inflation is also projected to ease albeit at a somewhat slower pace than the headline inflation rate.
“Separately, according to the CSO 30-day flash estimate, GDP decreased by 1.8 per cent in the third quarter compared to the previous quarter, and decreased by 4.7 per cent compared to the same quarter last year. While the CSO does not provide a breakdown of the drivers of the decline, it is likely reflective of ongoing weakness in production in key multinational-dominated sectors, a pattern we have seen throughout the year.
“I would stress that the flash GDP data are initial estimates, and have been subject to meaningful revisions in each of the releases throughout the year, while GDP itself is not a particularly meaningful measure of domestic economic activity. More detailed information will be published in early-December, alongside my preferred measure for the domestic economy, Modified Domestic Demand.”
Modified domestic demand, a proxy for the domestic economy, is the sum of consumer spending, government spending and investment, excluding investment in imported IP and aircraft for leasing. It also excludes changes in the value of stocks.
The HICP is an index of consumer prices that has been harmonised to allow comparisons across euro area countries. Unlike the domestic CPI measure it does not include, inter alia, mortgage interest.
The flash 30-day GDP estimate is released 30 days after the end of the reference quarter and is based on partial data. More detailed information on Ireland’s national accounts, including on the expenditure components of economic activity (for example: consumer spending, investment, MDD, exports) in the detailed 60-day release.