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Recent inflation data from the Central Statistics Office shows that overall annual inflation has climbed to its highest level since March 2024, reaching 2.9 percent. One of the most noticeable increases is in the cost of food and non alcoholic beverages, which has risen by 4.5 percent over the past twelve months. With Christmas approaching, this is an unwelcome development for many households.

A look at the CSO inflation calculator illustrates the impact on purchasing power. One hundred euro in October 2022 would have required 105.10 euro to match its value a year later. By October 2024, that figure had increased to 108.80 euro. In practical terms, consumers have lost nearly 10 percent of the value of their money in only three years.

The rise in food prices is linked to several factors. Costs have increased across core products such as meat, dairy, eggs, confectionery, bread and cereals. Because these ingredients sit at the base of the food supply chain, any increase eventually flows through to wholesale pricing and ultimately to retail shelves.

Agricultural pressures are a major contributor. Farmers face rising compliance costs linked to environmental regulations and a projected reduction of around 87,000 cattle this year, according to Bord Bia. Lower output reduces potential farm income, placing upward pressure on production costs to maintain financial viability.

Broader economic forces are also at play. Government spending has grown rapidly in recent budgets, exceeding the Irish Fiscal Council Advisory’s recommended net spending limit of 5 percent. Higher levels of public expenditure contribute to inflation when the supply of money in the economy expands faster than real economic output. Persistent overspending can therefore increase price levels, affecting everything from groceries to services.

The Government has introduced some measures aimed at supporting sectors and encouraging investment, including a VAT reduction for hospitality and an enhanced research and development tax credit. These initiatives are designed to support businesses and potentially ease cost pressures. Whether they translate into lower prices or improved wage growth remains uncertain.

While multiple factors are driving food price increases, the underlying issue is that inflation steadily erodes incomes. Without meaningful action to bring it under control, consumers will continue to see the real value of their earnings diminish every few years.

Disclaimer: This article is based on publicly available information and is intended for general guidance only. While every effort has been made to ensure accuracy at the time of publication, details may change and errors may occur. This content does not constitute financial, legal or professional advice. Readers should seek appropriate professional guidance before making decisions. Neither the publisher nor the authors accept liability for any loss arising from reliance on this material.