Education and insurance hikes nudge up inflation 

Increases in the cost of third-level education and higher health and motor insurance premiums led to a modest rise in inflation in June compared to 12 months ago.

Figures from the Central Statistics Office (CSO) show an increase of 0.4% in consumer prices in the year with a rise of just 0.1% from May of this year.

Education costs (+4.5%) showed the highest annual increase, followed by alcohol and tobacco products (4.1%) and miscellaneous goods and services (+3.9%) — which rose primarily due to higher insurance premiums.

The modest increase in consumer prices is likely to persist for the rest of the year, according to Merrion economist Alan McQuaid.

“Domestic inflationary pressures in Ireland are likely to remain depressed for some time to come. With the euro still above the $1.36 level, even with easier eurozone monetary policy which is pushing down costs, energy and commodity prices still well behaved and wage pressures limited, inflation should remain quite low for the immediate future.

“All in all, it still looks like disinflation or deflation rather than inflation is the bigger threat to the economy at this juncture,” said Mr McQuaid.

Decreases in the cost of clothing and footwear, household goods and transport costs offset much of the increases in other sectors.

Since May, the biggest increases were in the transport (1.7%) and restaurant and hotel (+0.5%) sectors, as well as in alcohol and tobacco goods.

The Irish Small and Medium Enterprises Association (Isme) warned that the low inflation figures masked the reality of increasing business costs and discouraged calls for wage increases. Isme chief Mark Fielding said: “Real cost increases tend to slip under the radar and get ignored by Government.”