Consumer Price Index falls 0.1%, according to CSO

Ireland’s consumer price index (CPI) fell 0.1% in July to stand 0.7% higher than a year earlier, with drops in clothing and furnishings prices balancing out rises in food and education, according to figures released by the Central Statistics Office.

The Harmonised Index of Consumer Prices (HICP), which strips out mortgages, also fell by 0.1% in the month and rose 0.7% on the year, the CSO said.

“One aspect of the CPI release that we closely monitor is the Private Rent index given the extent to which elevated yields have been and continue to be supportive of prices in Ireland’s key urban centres. To this end we note that the annual rate of inflation in private rents has increased again to 7.2% in July (from 7.0% y/y in June), its fastest pace of growth since early 2008. The latest rental report from Daft.ie, the country’s largest property website, showed that in Q1 2013 rental yields across Dublin ranged from 5.4% to 7.2%, while yields in the other major cities (Limerick, Cork, Waterford and Galway) ranged from 6.1% to 6.3%,” said Investec chief economist, Philip O’Sullivan. “In terms of the outlook we would caution that any further increases in indirect taxation in October’s budget could translate into upward pressure on prices in the short term.”