DAVY VIEW

March inflation overshot our forecast for 3.1% and reached 3.6%. Faster increases in energy prices are the main factor behind this. Unlike in Spain, where March’s energy prices increased by a far smaller extent compared to the last major energy supply shock in March 2022, the increase in Ireland was of a similar magnitude to four years ago. Non-energy industrial goods prices also increased faster than we expected, while food and services prices were relatively contained. Overall, in the absence of war in the Middle East, we think that Ireland’s headline inflation would likely have declined to about 2.3% in March.