Alcohol and tobacco push up prices

There was a marginal rise in consumer prices last month, while industrial output recorded an increase of 3% in September.

Figures from the Central Statistics office found a rise in the price of alcoholic drinks and tobacco, which jumped by more than 5%, pushed up overall figures.

The surge in the price of alcohol and tobacco was largely offset by a 2.2% fall in transportation costs such as petrol, diesel, air fares, and vehicles.

The head of Isme, Mark Fielding, criticised the composite inflation rate, which he said hides the burden of costs business have to bear.

“Although inflation continues to be low, State-influenced business costs such as electricity, gas, and local charges are increasing,” he said. “The latest Eurostat figures show that Irish industry pays the third highest electricity costs in the EU. SME owner-managers are struggling to keep their prices competitive because of the uncompetitive charges they are forced to pay.”

Davy economist Conall MacCoille said that, in the real world, goods prices have fallen more than 2%.

“In contrast, goods prices have fallen by 2.1% in the year to October,” he said. “For example, clothing and footwear prices are down 4.1% on the year, and furniture, furnishings, and household equipment are down 4%. So the weak CPI inflation release is primarily a sign that consumers are benefiting from weak import prices rather than worrying evidence that the economy is deflating again.”

The manufacturing sector reported strong figures on a year-on-year basis. However, Philip O'Sullivan, chief economist with Investec, said the positive figures were as a result of the poorer performance of last year.

“Industrial production increased 3% month-on-month in September,” he said. “On an annual basis, volumes were 11.9% higher, mainly reflecting the acute weakness experienced in Sept 2012 when the ‘patent cliff’ first hammered pharmaceutical production and total volumes were off 14.3% over the month.”

The traditional manufacturing sector showed signs of growth. Mr MacCoille said “Industry was amongst the worst performing sectors of the labour market in 2012, with employment down 2.7%. But employment in industry has started to expand again, up 2.9% in the year to Q2 2013.”