Why are prices still rising as inflation is falling?

Ireland's rate of inflation is estimated to be 4.6% for July, down from 4.8% in June
Jack Quann
Jack Quann

20.46 31 Jul 2023

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Why are prices still rising as...

Why are prices still rising as inflation is falling?

Jack Quann
Jack Quann

20.46 31 Jul 2023

Share this article

Ireland's rate of inflation stood at 4.6% for July, according to a flash estimate from Eurostat.

That is down from 4.8% in June; while a year ago, in July 2022, Ireland's inflation rate stood at 9.6%.

Inflation across the Eurozone dropped in July to 5.3%, down from 5.5% in June.


The figures suggest food, alcohol and tobacco are expected to have the highest annual rate in July.

This is followed by services, non-energy industrial goods and energy. Head of Communications Daragh Cassidy told The Hard Shoulder inflation and pricing is not the same thing.

"When the rate of inflation falls what that usually means is just that the price of goods is increasing at a slower pace," he said.

"It doesn't actually mean that prices are actually falling.

"They can still be going up, and unless we see outright deflation - which unfortunately nobody is forecasting at the moment - things aren't getting any cheaper".

'Carbon Tax is going up'

Mr Cassidy said the Government is also at play behind some of these increases.

"Fuel is a big thing: the restoration of excise duty on petrol and diesel is going back up," he said.

"That's going to add around 15c to a litre of petrol, 11c to a litre of diesel.

"In October the Carbon Tax is going up again by another €7.50, that adds another 2c to a litre of petrol and diesel.

"It also, of course, increases the gas - it'll add around €17 to gas bills over the course of a year.

"The Government will probably have to a lot in the budget".

Mr Cassidy said inflation is being used as an excuse by certain sectors.

"Over the past few months, just looking at some of the profits that some of big corporates have been making, absolutely suggests that there is just a little bit of price gouging going on.

"When you get into a high inflationary environment, it's very easy to say, 'Ah sure it's inflation'.

"It becomes very, very easy to... just maybe mask price increases".

Euro notes and coins are seen beside a tax form in May 2018. Euro notes and coins are seen beside a tax form in May 2018. Picture by: Mirco Cordes / Alamy Stock Photo

Mr Cassidy said prices actually rose in the month of June.

"In June, the CSO said that inflation had fallen from 6.6% to 6.1% and everybody was very, very happy," he said.

"But prices actually rose again on the month by 0.8%, which is actually quite a hefty increase over the course of four weeks.

"So yes the overall headline rate of inflation is easing, but all that's really happening is that the price increases are moderating.

"The cost of living squeeze isn't going anywhere anytime soon, unfortunately," he added.

Listen back here:

Main image: Split-screen shows file photos of petrol prices on display, and a person putting fuel in their car

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Alcohol Carbon Tax Daragh Cassidy Diesel Eurostat Explainer Food Inflation Petrol Price Gouging Prices The Hard Shoulder Tobacco

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