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Bank of Ireland’s September 2026 outlook forecasts Irish HICP inflation rising to 4% in the final months of 2026, then averaging 3.2% in 2027. That is a forecast, not a reading that inflation has already reached 4%. Separately, the bank’s group chief economist, Conall Mac Coille, told the Irish Examiner that CPI inflation could peak close to 4% at the turn of the year. CPI and HICP are different measures, so the two figures should not be treated as interchangeable.
What Bank of Ireland forecasts
The bank’s September 2026 Ireland Outlook expects HICP inflation to rise to 4% in the final months of 2026. It forecasts a 3.2% average for 2027. The first figure describes an expected late-year high; the second is an average across the following year, not a predicted peak.
Mac Coille’s comment, reported by the Irish Examiner, uses CPI: “Given the surge in oil and gas prices we expect CPI inflation to peak close to 4% at the turn of the year, another unwelcome squeeze on households’ spending power – which will be challenging – especially for those on low incomes,”
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HICP means the Harmonised Index of Consumer Prices, a measure designed to make consumer-price inflation comparable across EU countries. CPI means the Consumer Price Index. Bank of Ireland’s official outlook states its headline inflation forecast in HICP terms; the Examiner’s quotation from Mac Coille refers to CPI. Keep the labels attached to the figures rather than combining them into a single measure.
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The timing also matters: “the final months of 2026” and “at the turn of the year” refer to a forecast peak near year-end, while 3.2% is the predicted average for 2027. None of these statements establishes an observed 4% inflation rate.
What is driving the forecast
Bank of Ireland points to the surge in oil and gas prices. Higher energy costs can push up household bills directly and feed into the cost of goods and services, putting pressure on spending power. Mac Coille described the effect as an unwelcome squeeze, particularly for people on low incomes.
The forecast is therefore sensitive to both the size and duration of energy-price pressures. The Central Bank of Ireland’s Q1 2026 Quarterly Bulletin also identified higher energy prices as an inflation risk, but its projections were published earlier and rely on different assumptions.
How the inflation forecast fits with the wider outlook
Bank of Ireland’s September outlook pairs its inflation forecast with weaker GDP in 2026 and growth in 2027. It also expects modified domestic demand—a measure of underlying domestic economic activity—to grow in both years.
| Bank of Ireland forecast | 2026 | 2027 |
|---|---|---|
| HICP inflation | 4% in the final months of the year | 3.2% annual average |
| GDP growth | -1.2% | 3.1% |
| Modified domestic demand growth | 3.8% | 2.8% |
| House-price inflation | 4% through the year | 3.5% |
| Housing completions | 39,600 | 42,000 |
These are forecasts in the bank’s September 2026 outlook, not confirmed outturns. The Irish Examiner reports modified domestic demand growth of 3.9% for 2026, compared with 3.8% in the bank’s official summary; the official figure is used here.
How it compares with the Central Bank’s earlier projections
The Central Bank’s Q1 2026 bulletin gives a useful example of how different assumptions can produce different forecasts. Its baseline HICP projections were 2.9% for 2026 and 2.6% for 2027. In a severe energy-price scenario, it projected 4.2% and 3.8%, respectively.
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Those Central Bank figures are earlier baseline and conditional stress projections, not an update or direct revision of Bank of Ireland’s September forecast. In particular, the adverse scenario depends on a more severe energy-price path; it should not be read as the Central Bank’s central expectation.
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The bank’s wider projections include consumer spending growth of 1.8% in 2027, pay growth of 3.5%, job creation of 2%, and planned Budget 2027 tax cuts of €1.5 billion. These figures sit alongside the expected inflation pressure: the outlook anticipates continued activity and income growth, but Mac Coille’s warning is that higher energy costs could still squeeze household purchasing power, especially for low-income households.
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