Low inflation 'may cut wage rises'

THE lowest inflation rate in five years could cut wage increases to close to 3% this year, according to key economists.

Inflation fell to just 1.8% in January compared to 4.8% 12 months ago, figures released by the Central Statistics Office yesterday reveal. However, economists believe inflation might increase again later in the year and could end the year at 2% or 2.5%.

The EU Harmonised Index of Consumer Prices HICP used for comparisons with European inflation has fallen to 2.3% in Ireland, only a little ahead of the EU inflation rate of 2% in December.