Inflation in first fall for four months

A SLIGHT drop in consumer prices, particularly mortgage costs and the price of food and clothing, pushed the annual rate of inflation down to 2.5% in December, the first time in four months that inflation slowed.

That figure, as outlined in yesterday’s latest Consumer Price Index (CPI) from the Central Statistics Office (CSO), was down from a rate of 2.9% measured in November. Overall, consumer prices fell by 0.3% in December, compared with a rise of 0.2% in the same month in 2010. The drop was, however, the sharpest monthly drop in nearly two years and it is expected that the slowdown in the economy will lead to further downward trends.

“Clearly, a lot depends on how severe the global economic downturn is, but we now think Ireland’s headline inflation rate may average no more than 1.5% in 2012,” commented Alan McQuaid, chief economist with Bloxham Stockbrokers.