The Harmonised Inflation Rate Month-on-Month (MoM) for Ireland declined by -0.20% in December 2025, according to the latest data from the Sigmanomics database. This contrasts with November’s 0.40% increase and marks a reversal from the prior month’s upward trend. Over the past year, the average monthly inflation rate has hovered around 0.15%, indicating moderate inflationary pressures overall.

Drivers this month

• Energy prices fell by approximately 0.30%, easing headline inflation.
• Shelter inflation contribution dropped to 0.10%, down from 0.30% last month.
• Food prices remained stable, contributing near zero to the monthly change.
• Transport costs declined by 0.20%, reflecting lower fuel prices.

Policy pulse

The current inflation reading sits below the European Central Bank’s (ECB) 2% target on a monthly basis, signaling a temporary easing in price pressures. However, annual inflation remains elevated, keeping monetary policy on alert. The ECB’s recent rate hikes appear to be moderating demand, but core inflation components show stickiness.

Market lens

Immediate reaction: EUR/USD slipped 0.15% within the first hour post-release, reflecting cautious sentiment. The 2-year German bund yield declined by 4 basis points, signaling a slight easing in inflation expectations. Irish government bond spreads remained stable.

Examining core macroeconomic indicators alongside the Harmonised Inflation Rate reveals a nuanced picture. GDP growth for Q3 2025 was revised upward to 0.50% quarter-on-quarter, supporting consumer demand. Unemployment in Ireland remains low at 4.20%, sustaining wage pressures. The Purchasing Managers’ Index (PMI) for manufacturing dipped slightly to 51.20, indicating modest expansion.

Monetary Policy & Financial Conditions

The ECB’s deposit rate stands at 3.75%, unchanged since October 2025. Financial conditions have tightened moderately, with credit growth slowing to 3.10% year-on-year. The Irish Central Bank has maintained a cautious stance, emphasizing data dependency amid inflation volatility.

Fiscal Policy & Government Budget

Fiscal stimulus remains supportive, with the government’s 2025 budget allocating €1.20 billion towards housing and energy subsidies. The budget deficit narrowed to 2.80% of GDP in Q3, reflecting improved tax revenues and controlled spending. However, rising public debt at 58% of GDP warrants vigilance.

Market lens

Immediate reaction: The EUR/IESEUR currency pair weakened by 0.15% post-release, reflecting market caution. The Irish 2-year bond yield dropped 4 basis points, indicating a slight reduction in inflation risk premiums. Equity markets showed muted response, with the ISEQ index closing flat.

Looking ahead, Ireland’s inflation trajectory faces multiple influences. The base case scenario (60% probability) anticipates inflation stabilizing around 0.10% MoM in early 2026, supported by moderate wage growth and steady energy prices. The bullish scenario (20% probability) envisions inflation rising above 0.30% MoM if supply constraints intensify and wage pressures accelerate. Conversely, the bearish scenario (20% probability) sees inflation dipping below -0.30% MoM if global energy prices fall sharply and demand softens due to tighter monetary policy.

External Shocks & Geopolitical Risks

Ongoing geopolitical tensions in Eastern Europe and supply chain disruptions remain key downside risks. A potential escalation could drive energy prices higher, reversing recent gains. Conversely, a resolution or easing of trade frictions could ease inflationary pressures.

Structural & Long-Run Trends

Long-term inflation in Ireland is influenced by demographic shifts, housing supply constraints, and productivity growth. The recent moderation in inflation may be temporary, as structural factors such as housing shortages continue to exert upward pressure on prices.

In summary, Ireland’s Harmonised Inflation Rate MoM for December 2025 signals a cooling phase after recent increases. While headline inflation eased by -0.20%, underlying pressures remain, warranting close monitoring. Monetary policy is likely to remain data-dependent, balancing inflation control with growth support. Fiscal measures and external developments will play pivotal roles in shaping the inflation outlook. Market participants should prepare for continued volatility amid evolving macroeconomic conditions.

Key Markets Likely to React to Harmonised Inflation Rate MoM

The Harmonised Inflation Rate MoM is a critical gauge for markets sensitive to inflation trends. Key symbols historically tracking this indicator include:

• CRH – Ireland’s leading building materials firm, sensitive to inflation-driven construction costs.
• EURUSD – Euro to US Dollar currency pair, reflecting ECB policy responses to inflation.
• BTCUSD – Bitcoin as an inflation hedge, often reacting to inflation surprises.
• IBG – Irish Bank Group, sensitive to interest rate changes driven by inflation.
• EURGBP – Euro to British Pound, reflecting cross-border inflation and policy differentials.

FAQs

What is the Harmonised Inflation Rate MoM for Ireland?

The Harmonised Inflation Rate MoM measures the monthly percentage change in consumer prices across Ireland, harmonised for EU comparability.

How does the latest inflation reading affect ECB policy?

The December 2025 reading of -0.20% MoM suggests easing inflation, which may slow ECB rate hikes but does not eliminate the need for vigilance.

What are the main risks to Ireland’s inflation outlook?

Risks include energy price volatility, geopolitical tensions, wage growth, and supply chain disruptions impacting inflation persistence.

Key takeaway: Ireland’s inflation shows signs of short-term easing but remains vulnerable to external shocks and structural pressures, requiring balanced policy responses.