Inflation at six-year high as rents rise

Inflation at six-year high as rents rise

Rents, mortgage payments and utility bills saw the biggest hikes for consumers in March as annual inflation rose above 1% for the first time in six years, according to the CSO.

Prices on average were 1.1% higher in March compared with 2018, the highest annual level since February 2013, the body said.

Household bills rose primarily due to higher rents and mortgage interest repayments in addition to an gas, electricity and home heating oil price hikes, it said.

Private sector rents rose 0.4% last month and are up 5.6% since March last year, while local authority rents rose 1.1% in March are up 4.3% in the past 12 months, according to the figures.

Gas was now 10% more expensive than last year, data showed.

Petrol was just 0.2% more expensive than March 2018, but diesel is 5.5% more expensive.

Cantor Fitzgerald economist Alan McQuaid said although the consumer price index was stronger than expected, overall inflationary pressures in the economy remain fairly-muted for the time being.

Even with the pick-up in March and despite strong economic growth, there is as yet little sign of sustained pressure on the prices front, which appears to be the same story across the eurozone, suggesting that the ECB will be in no hurry to increase interest rates.

The price of oil will be critical in determining the headline inflation outlook over the next twelve months or so, Mr McQuaid said.

"But they remain volatile and hard to predict given the uncertainty over Opec supply and geopolitical tensions in the Middle East, and there are also question marks over global demand," he said.

Mr McQuaid said with the economy continuing to grow strongly, the more immediate worry on the domestic inflation front centres around increased wage demands, particularly in the public service.

Motor insurance costs fell 1.7% in March, and 5.9% year on year, according to the CSO.

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