Lowest annual rate of inflation since 2010

March saw the lowest annual rate of inflation since Sept 2010 as consumer prices increased by 0.5% year-on-year, down from an annualised rise of 1.1% in February.

According to updated CSO figures published yesterday, prices rose by 0.4% on a monthly basis in March, the lowest monthly rate increase since Oct 2011.

The monthly consumer price index from the CSO shows the most significant price increases, on a monthly basis, came in the areas of clothing and footwear, and transport; while yearly increases were seen in education, and alcoholic beverages and tobacco products.

Chief economist with Merrion Stockbrokers, Alan McQuaid, said that domestic inflationary pressures are likely to remain depressed “for some time to come”, with continued weak consumer demand putting downward pressure on prices in the coming months. He sees Ireland’s headline annual inflation rate falling back further this year, forecasting an average figure of 1.3% for the year. That would be down from 1.7% in 2012 and 2.6% in 2011.

“The main risk on the inflation front, this year, will once more come from the external side and, in particular, the price of energy on the global market,” he said.

“A sluggish world economy should contain oil prices, but, as ever, there will be geopolitical risks keeping prices higher than they would otherwise be.”

Ireland’s inflation rate is now well below the eurozone average — which fell from 1.8% to 1.7% in February — but small firms lobby group Isme yesterday said our reduced inflation figures are merely a result of “the cyclical response to the Irish and international recession, rather than structural or policy-induced changes”.

As a result, ISME is calling on Government to reduce the underlying costs in the economy.