Consumer price inflation rises 5% in January as price hikes weigh on household bills

Price pressures have been driven most by the shortages of all types of energy across Europe this winter.

Irish consumer price inflation rose by 5% in January, as price hikes for energy and other related costs continued to weigh on household bills.

However, inflation was down from the 5.5% rate posted in December – helped by lower prices for clothing and footwear – which will spark debate on whether the latest figures mark some sort of respite.

Inflation has unexpectedly returned to most other parts of the world as the global economy roared back from the worst of Covid crisis.

Irish annual price inflation had steadily risen from 3.7% in September, and compares with the rate of 5.1% in October and November’s 5.3%.

Price pressures have been driven most by the shortages of all types of energy across Europe this winter.

The squeeze has been made worse by the crisis over Ukraine because Russia is a major supplier of gas to western Europe.

The January figures still show some outstanding increases across a number of energy costs.

The CSO said the price of home heating oil last month was 50% more expensive and petrol prices were up by over 29% compared with January 2021.

The return of inflation in Europe has taken many economists by surprise and has already forced the ECB to reconsider its commitment to keeping interest rates unchanged this year.

Beyond energy, the latest figures show worrying price pressures in housing – rental costs were up by an annual 8.4% and mortgage interest rates rose by almost 4%.

Much focus remains on whether inflationary pressures will spill across the economy as a whole as happened in the early noughties.

Food and non-alcoholic beverages rose by 2.1% in January from a year earlier, while alcohol and tobacco prices climbed 8.4%, according to the CSO figures.