Consumer price inflation of 5.5% is fastest pace since 2001

The squeeze on the living standards of Irish households is continuing and the signs are there will be no dramatic easing in the exceptional pressures in the months to come

New CSO figures show that spiralling winter wholesale energy costs have been passed down the pipeline to consumer bills, with the cost of household utility bills, which include electricity, gas and other fuels, up 11.8% in the year.

The squeeze on the living standards of Irish households is continuing, with inflation in December reaching 5.5% – the highest since April 2001 – and the signs are there will be no dramatic easing in the exceptional pressures in the months to come.

New CSO figures show that spiralling winter wholesale energy costs have been passed down the pipeline to consumer bills, with the cost of household utility bills, which include electricity, gas and other fuels, up 11.8% in the year.

The shortages of all types of energy across Europe to generate power on the Irish grid this winter, along with the tensions over Ukraine involving Russia which is a major supplier of gas, are driving consumer prices.

European wholesale gas prices for delivery in the coming months as tracked by the Irish Examiner have eased in recent days, but prices nonetheless trade at elevated levels through the summer months. That suggests that the pressures behind household utility bills are not going to ease any time soon.

But economists are also fearful should the widespread inflation of the 1970s which was also sparked by another type of energy crunch be repeated this year.

The CSO figures suggest that prices of a wide range of Irish consumer goods may be ticking higher as businesses pass on price increases to offset higher energy costs. Food and non-alcoholic drinks rose driven by higher prices for bread, soft drinks, and fruit and vegetables, according to the figures.

Ireland is not alone in facing exceptionally strong price pressures as energy costs and supply chain shortages following the lifting of the worst of the global Covid economic siege are driving prices higher around the world.

Britain also on Wednesday reported annual inflation at a 30-year high of 5.4% in December and German national consumer prices rose by 5.3%.

"Not only does this [UK inflation] provide additional evidence that inflation is becoming endemic rather than transitory, it also bodes ill for households facing multiple rises in the cost of living this spring," said Kitty Ussher, chief economist at the Institute of Directors.

However, Ireland also faces other longstanding price pressures that will not go away because of the acute shortages of housing.

The CSO figures show the cost of private landlord rents rose 0.6% in the month and are now 8.4% more expensive than in December 2021.