Inflation rate dips to 2.2%

INTENSE competition in the retail sector helped push the annual rate of inflation down to 2.2% despite a post January sales 11.2% increase in footwear and clothing prices in February.

The Central Statistics Office (CSO) Consumer Price Index for February, published yesterday, increased by 0.8%, the same as recorded in February of last year. This saw the annual rate of inflation falling from 2.3% to 2.2% between January and February.

Irish inflation as measured under the EU-Harmonised Index of Consumer Prices fell by 0.9% to hit 2% in February in line with the ECBank’s inflation target for the euro area.

IIB Bank chief economist Austin Hughes believes Irish inflation will remain subdued in coming months and they continue to expect the average inflation rate will be around 2.3% for 2005 as a whole.

“Food price inflation edged higher last month but food prices are still flat from a year ago; with a wide range of items encompassing fish, fruit, milk, vegetables and biscuits all cheaper than in February 2004,” he said.

Goodbody Stockbrokers economist Philip O’Sullivan said a trend emerging over the last few years has been the higher rates of inflation in areas of the economy dominated by the public sector. “We note that health (+5.9% year-on-year), education (+6.3% yoy) and housing costs (+9.4% yoy), which include local authority charges and utilities, are expanding at levels far in excess of the average rate.”

ISME chief executive Mark Fielding, said that while the headline rate showed a decrease the real cost to business is hidden in the detail, with the highest percentage rises in the last 12 months being for local charges and electricity, specifically affect business.