There was more good news on inflation this week, with data released by the Central Statistics Office showing that prices in Ireland increased by 1.5% from a year ago in June.

A similar euro area-wide measure published by Eurostat on Tuesday put the June rate at 2.5% for the monetary union as a whole.

Much of the slowdown in price rises was driven by energy costs, which are 5.6% lower when compared to June 2023.

The costs of services continue to rise, with the annual inflation in the sector at 4.1% across the euro area last month.

The level of inflation in Ireland would indicate that the European Central Bank should cut rates further to suit the economy here. However, with the overall euro-area rate still above the ECB’s 2% target, those cuts may be slower to come than would be ideal.

Speaking this week, Christine Lagarde, president of the ECB said that it will take time for the central bank to gather sufficient data to be sure that the risk of inflation running above the bank’s target has passed.

She added that the very strong labour market in Europe gives the bank time to make that assessment before cutting rates further.

Overall, the data on a slower pace of price rises is good news for consumers and businesses in Ireland, but the longer the central bank waits to start cutting rates, the longer borrowing costs will remain elevated here.