Rents, airfares and health insurance premiums all up last month

Rents and home and health insurance premiums continued to rise in February while airfares also rose significantly, according to the last Consumer Price Index.

Rents, airfares and health insurance premiums all up last month

Prices on average were up 0.5% compared to February 2016, with the most notable changes in transport, hotels and restaurants and health.

Private renting went up 1.2% last month and is now 8.5% more expensive than a year before. Local authority rental remained the same as last month but is up almost 4% from February 2016.

Home insurance was up 2.5% on last month while health insurance rose 1.8%.

However, motor insurance premiums remained unchanged from the previous month, and are now 4.5% more expensive than February 2016. Home insurance is now up 10% in a year, with health insurance close behind at 9%.

Air fares were up 7.2% in February, while petrol costs rose 0.7%. Diesel remained unchanged but is up 20% from the same period last year, while petrol costs 13% more than February 2016.

However, there was some good news for consumers, with grocery shopping falling from last year due to lower prices across a range of products such as meat, jam, confectionery, bread and vegetables.

There were also drops in the cost of household furnishing items and recreation.

The annual inflation rate came in at 0.5% in February as against 0.3% in January and zero in December.

Economist Alan McQuaid of Merrion Stockbrokers said the cost of many services is likely to remain elevated.

“Oil prices will be critical in determining the headline inflation outlook over the next 12 months or so, but they remain volatile and hard to predict given the uncertainty over potential OPEC output cuts.

But despite the fall over the past couple of weeks, we still think prices will be higher on average this year than in 2016,” he said.

Ireland’s average inflation rate was 0% in 2016, compared with -0.3% in 2015 and 0.2% in 2014, but was set to rise in 2017, Mr McQuaid said.

“Based on the figures for the first two months of the year, we are now looking for an annual inflation rate of 0.8% in 2017 as overall energy costs pick up. However, the services sector will be the main source of upward pressure,” he said.

He said that the “more immediate worry” was likely to come with increased wage demands. “Extra pay for public servants will mean less money being spent on vital services. The last thing the economy needs now against the uncertain Brexit backdrop is to become uncompetitive again through higher wage costs,” he said.

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