CSO: Lower fuel and grocery costs drive Irish prices down

Prices were 0.6% lower last month than in the same period of 2014 as fuel and grocery prices contributed to the longest decline in prices on an annual basis since the middle of 2010.

The latest Consumer Price Index (CPI) shows that between February and March prices actually picked up to the same degree (0.6%) on a monthly basis but remained lower than at the equivalent stage of last year.

The global slide in fuel prices once again drove much of the decline with transport costs down almost 5% year-on-year in March.

Other data released by the Central Statistics Office yesterday shows a combination of ferocious competition in the domestic grocery market and softening wholesale food prices globally has translated into significant savings for Irish shoppers.

The cost of food and beverages (excluding the sale of alcohol) was more than 2.5% lower last month than March of last year as the battle for market share heated up between discounters Aldi and Lidl and more established outlets like Dunnes Stores, SuperValu and Tesco, which now commands top spot in the Irish market by a just whisker.

Commenting on the CSO’s figures, Investec Ireland chief economist, Philip O’Sullivan said the fall in prices, coupled with other positive trends for consumers, should translate into an easing of personal finances but warned that legacy debt continues to weigh on many.

“The overall decline in consumer prices over the past year, mainly due to factors external to the domestic economy, has provided a lift to Irish consumers, an increasing number of whom are also benefitting from the recovery in the labour market and nascent wage growth, while income tax cuts add to the generally positive narrative where households are concerned,” said Mr O’Sullivan.

“With that being said, the legacy issue of elevated debt levels of household debt cannot be overlooked when considering the prospects for Irish consumers.”

Indeed, despite recent projections of strong consumer spending the pace of increases have remained noticeably sluggish to date, as consumers opt to pay down overhanging debt instead of increasing spending.