Changing times: Consumer prices rise at the fastest monthly rate in almost three years

RENTS, food and clothing costs are starting to creep higher again as consumer prices rise at the fastest monthly rate in almost three years.

Clothing prices increased significantly last month, rising by 6.6% after the Christmas sales while alcohol prices jumped more than 2%.

According to the latest figures from the Central Statistics Office (CSO) the rate of inflation increased from 1.7% in January to 2.2% last month, the highest rate since November 2008.

Having fallen for almost two years rent prices are again starting to go up. They rose by 1% last month and by 0.1% in January. The last time rents rose by 1% or more was in March 2008.

Food prices were also up last month rising by 0.7% from January. Prices here are now up 1.2% from November of last year, a sign that the recent increases in global food prices are having an impact in Ireland.

The figures also showed a 21% rise in airfares which drove prices in the transport sector higher.

Analysts, however, said the rise in clothing prices was from January was actually a smaller than usual rebound in prices following the winter sales.

In February last year prices were down 3.2% in the year so this latest increase will come as a shock to many consumers already struggling with higher mortgage costs.

Ulster Bank economist, Lynsey Clemenger said last month’s rise is clear evidence of the shift in inflation dynamics underway in the Irish economy.

The director of the Small Firms Association, Avine McNally said that the most notable increases in the year were in housing, water, electricity, gas (9.5% increase) and transport (3.5% increase).

“These increases are not helping struggling small businesses and with the current political unrest in the Middle East we will see further increases in fuel costs,” said McNally.

“The Government needs to take firm action to reduce the costs it imposes on the economy, so that it is not having knock-on negative impacts on small businesses who are fighting for survival,” she added.

Chief executive of Irish Small and Medium Enterprises Mark Fielding, also said the high level of inflation is being driven by the increase in oil prices.

“With geopolitical uncertainties in Libya and the Middle East, oil prices will remain high, driving inflation higher in the coming months, with the resultant negative impact on the economy. The exchequer receives, up to 57% of the end cost of oil products, including petrol and diesel, in the form of, excise duties including carbon and VAT.

“The last thing that business and the economy needs is inflationary pressure. Small and medium businesses do not have the option of passing increased costs on to their customers and therefore have to take the hit on their bottom line,” he said.

Ms Clemenger said that from a competitiveness standpoint, the increases in the Irish price level now evident need to be seen in the context of developments elsewhere.

The annual rate on the harmonised index of consumer prices measure, which excludes mortgage interest relief increased 0.9% in February from 0.2% in January.

“While this represents the strongest rate of increase since January 2009, it continues to compare favourably with the corresponding measure of prices in other economies including the UK (up 4.0%) and euro zone (up 2.4%).”