Cost of living edges up

Cost of living edges up

The cost of living increased by half a per cent over the last year, official figures revealed today.

The biggest changes in goods and services were education up 9.5%; housing, water, electricity and energy up 8.5%; and communications up 2.9%.

The Central Statistics Office (CSO) said the cost of alcohol, clothes and footwear and household furniture, equipment and maintenance all fell.

Consumer prices fell by just 0.1% last month.

Analysts said that the modest yearly rise in consumer prices indicated that inflationary pressures remained low.

"There is little in the way of inflation pressures outside of mortgage interest costs and education,” said Dermot O’Leary of Goodbody Stockbrokers.

“Ireland continues to have the lowest inflation rate (or highest deflation rate) in the euro-area.”

Aidan Corcoran of Davy Research meanwhile said the weak annual price rises reflected “anaemic consumption demand in the past year”, with much of the recent small gains coming from external factors and mortgage costs.

"Inflation, which would help to reduce the real value of household debt, has yet to take hold in a meaningful way,” he said.

Employers’ group IBEC said the latest inflation figures indicate that price pressures are set to remain very modest in the Irish economy for some time yet.

"Following the end of the summer sales in clothing and footwear, we would have expected to see average prices rise marginally in September,” said IBEC chief economist Fergal O’Brien.

“However, the CPI was actually lower than in August as falling food, restaurant and other prices more than offset the seasonal bounce back in clothing and footwear prices.

“The harmonised index, which excludes mortgage interest, remains negative at -1%. “

Mr O’Brien aid Ireland must continue to use what he called “this window of opportunity” to restore competitiveness.

Groups representing small business were however highly critical of increases in State-controlled costs.

The Irish Small and Medium Enterprises Association (ISME) called on the Government to immediately tackle the costs under their control, including transport, waste, energy and local charges.

The Government policy of a Smart economy, based on export driven growth, is nonsense, once they continue to allow state influenced cost increases to undermine competitiveness,” said ISME Chief Executive Mark Fielding.

“Companies are attempting to reduce their costs on an ongoing basis to compete, but are hampered time and again by cost increases introduced by the State.”

His comments were echoed by Avine McNally of the Small Firms’ Association (SFA)

“Irish small businesses have taken harsh steps to regain cost-competitiveness, but any gains are negated by the costs imposed by the government administered sector,” McNally said.

“Government are ignoring a key priority by not urgently tackling the issue of costs. If action is not taken further jobs will be lost and businesses will close."

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