Living costs may jump after slight dip

THE cost of living fell slightly in December, in spite of increases in fuel prices and mortgage repayments. Inflation, as measured by the Consumer Price Index, slipped to 2.5% in December from 2.6% in November.

Yesterday’s figures from the Central Statistics Office (CSO) show the cost of food, drink and clothing decreased in December, offsetting rises in the cost of electricity, gas, heath services and mortgage repayments.

Housing, water, electricity and heating costs rose by 10.8%, health costs rose by 5.8%, education by 4.9%, restaurants and hotel prices increased by 3.2%, and transport costs rose by 3.1%.

According to the CSO, clothing and footwear prices were down 1.9% in December, while furnishings and household equipment prices were 1.2% lower and food prices dipped by 1%.

Ulster Bank chief economist Pat McArdle predicted a rise in inflation from its current low of 2.5%.

“The January figure will capture the rest of the mortgage interest rate increases and it will also be affected by higher CIÉ fares and ESB prices.

This time, there will be no offset from petrol prices, which have remained unchanged over the Christmas period. Our forecast for January is 2.9%,” he said.

Friends First economist Jim Power said that over the past five years it has been areas of the economy controlled by the State that have recorded the biggest price rises.

Since 2000, hospital fees are up by nearly 80%, motor tax is up over 23%, electricity bills by 50% and health insurance costs have increased by 70%.

By contrast, food bills rose by only 13.2% and clothing costs actually dropped by 7.7% over the same five-year period.

Opposition parties and business groups said it was time the Government to curb semi-state bodies from increasing prices.

“There is a clear message for the Government: it cannot continue to ignore the suffering of consumers, and it should stop regarding consumers as a soft target for price rises and stealth taxes,” Fine Gael finance spokesman Richard Bruton said.

According to Davy Stockbrokers, the rise in oil prices this month is likely to have a big impact on inflation.