DAVY VIEW

Similar to Spain’s result last week, Irish inflation for August was driven higher by energy prices owing to renewed US-Iran conflict. This was somewhat offset by food prices, which were unchanged compared to July and up by just 0.6% in annual terms. Core inflation moderated to 3%, in line with our forecast, helped by some favourable base effects. Services prices were unchanged compared to July, suggesting underlying inflation pressures are not yet acute. However, upside risks to inflation remain for the months ahead due to a lagged impact of energy price increases.