DAVY VIEW

Irish CPI inflation was 9.1% in June, not surprising given the flash Eurostat release indicated that HICP inflation was 9%. Worryingly, the core rate rose to 5.2% following sharp gains in the prices of food (2.3%), restaurants/hotels (1.3%), rent (0.8%) and transport (5.4%) on the month. CPI inflation has beaten our forecast for an 8.5% peak in June, so the squeeze on households’ real incomes and consumer spending will be all the more severe.