The Central Bank of Ireland has published its second Quarterly Bulletin of 2026, revising its baseline inflation forecast up to 3.5 percent for 2026 and 2.9 percent for 2027 as prolonged disruption linked to the Middle East conflict has lifted energy price assumptions. The bulletin points to weaker consumer spending in 2026 as higher energy costs squeeze real incomes and confidence, but it still projects growth in modified domestic demand over the forecast horizon because multinational enterprise-related investment remains strong. The bulletin says first-quarter data again showed the gap between domestic activity and headline national accounts. Modified domestic demand grew strongly, supported by multinational-dominated investment including AI and data centre-related capital goods, while GDP fell sharply because of volatile polypeptide-hormone exports and weaker offshore goods trade. It also highlights a wider range of possible inflation outcomes under alternative scenarios, with a swift easing in the conflict lowering inflation below the baseline, while a severe energy shock could push inflation toward 5 percent in 2027 and significantly slow growth.
Central Bank of Ireland2026-06-18
Central Bank of Ireland raises 2026 and 2027 inflation forecasts to 3.5 percent and 2.9 percent in Quarterly Bulletin
The Central Bank of Ireland's second Quarterly Bulletin raises baseline inflation forecasts to 3.5 percent in 2026 and 2.9 percent in 2027, mainly because the Middle East conflict has increased energy price assumptions. It expects weaker consumer spending in 2026, but continued modified domestic demand growth driven by multinational-led investment, while first-quarter GDP fell sharply because of volatile multinational-related trade flows.