Further falls predicted as prices in clothing and food sectors plunge

CLOTHES and food costs plunged in the last year with experts predicting prices are set to fall even further.

Clothing and footwear prices fell almost 12% in 2009, while food prices are down close to 8%. Fruit prices are down 12.4%, potatoes 12% and coffee 12.6%.

For 2009 as a whole consumer prices fell 4.5% as against an average increase of 4.1% in 2008.

Consumer prices fell at an annual rate of 5% last month, compared with an annual fall of 5.7% in November.

Analysts, however, have pointed out that while prices across most sectors fell last year, state-controlled public administration charges posted a double digit increase.

The CSO figures show that the overall increase in prices from 2005 to 2009 was 8.4%, yet the equivalent rises in education costs was 24.4%, house, water, electricity and other fuels was 19.4% and health was 17.9%.

Last year saw hikes in hospital services, which went up 11.7%. Also up were rail travel by 8.3%, bus prices 11.7% and motor tax by 4.1%. Increases were also seen in petrol, 16.6%, and insurance which surged 16.7%. The biggest jump was in health insurance, which soared 21.3%.

The National Competitiveness Council (NCC) pointed out that although prices fell last year this was mainly due to necessary cost adjustments as a result of the severity of the recession rather than policy initiatives by Government.

The Small Firms Association said the Government needs to take “firm action” to bring the costs it imposes on the economy back in line with the deflation levels.

Last month alcoholic beverages and tobacco prices dropped. Transport costs were also lower in the month as prices for new and second-hand cars fell.

For 2009 as a whole mortgage repayments dropped by 40% as the European Central Bank cut interest rates. Energy prices were down 7.9%, rents fell by 14%, but education prices rose 6.4% and alcohol and tobacco by 6.3%.

Small business group ISME said business costs were still increasing, adversely affecting competitiveness. It called on the Government to carry out an immediate review of business costs.

Bloxham economist, Alan McQuaid expects prices to continue to be lower year-on-year in 2010, though he said the annual average fall this year should be less than 1%.