The good news on inflation continued this week with the Central Statistics Office (CSO) flash estimate for putting price growth at 1.7% for the 12 months to the end of March.

The drop in energy prices was the biggest driver of the reduction, with those costs now 8.4% lower than a year ago.

Energy inflation was at minus 3.1% in March alone. There was less good news for food producers, with prices for food down 0.1% in the month. There is also a risk that the drop in energy prices will not be sustained.

This week, the Government reintroduced excise duty of 4c on a litre of petrol and 3c on a litre of diesel, which will certainly translate into higher costs in the months ahead.

Excluding food and energy, inflation in Ireland was at 2.8%.

Separately, Kantar reported grocery price inflation at the lowest level in almost two years this week, coming in at 3.7% from a year earlier, having peaked at close to a huge 16% last year.

Taken as a whole, the slowdown in price growth from the levels seen last year is good news, particularly as it may give the European Central Bank (ECB) room to cut interest rates earlier than previously thought.

The central bank has a target of inflation at or below 2%, and Ireland is already there.

If the lower inflation rates lead to a reduction in ECB interest rates, then that should feed though to lower borrowing costs for consumers and farmers.

The next meeting of the ECB’s decision-making body is on 11 April, and while there is no change expected to be announced then, analysts will carefully listen to the press conference and comments from central bankers for hints of a rate cut as soon as the following meeting in June.