Inflation falls to 4% as further declines predicted

THE rate of inflation fell by 0.3% in October to 4%, its lowest level in two years and the expectation is that it will go as low as 1%, or even 0%, by the end of next year.

The main driver for the latest fall, according to yesterday’s Consumer Price Index (CPI) from the Central Statistics Office, was a 2% year-on-year drop in clothing and footwear prices and a 0.5% decline in the price of furnishings and household equipment. The drop in oil prices and a lowering of air fares led to a 1.8% fall in transport costs.

However, food prices on the year went up by 4.6%, with energy prices rising by 11.5%. A potential easing of price pressure in both these areas — the biggest culprits of high overall inflation in recent times (inflation hit 5% in May) — is being seen as the big hope for an significant lowering of inflation levels.