Record levels of  inflation as businesses  battle rising costs and war uncertainty 

Fuel prices on display at a Circle K service station on Glasnevin Avenue in Dublin. Fuel prices are among the sky-rocketing commodities. Picture: Brian Lawless

There were unprecedented cost pressures for Irish companies in March as inflation and the war in Ukraine led to many businesses raising their own charges to record levels.

This charge inflation by service providers surpassed the previous record set in October 2000 as businesses are combating rising costs of energy, fuel, labour, insurance, transport, in addition to the uncertainty caused by the war in Ukraine, an AIB survey showed.

“Businesses continued to experience severe upward pressure on input prices, in particular from higher labour, energy, fuel, insurance and transport costs. Indeed, the rate of input price inflation was the fastest in the 21-year history of the survey. Meantime, the prices charged to customers also rose at a record pace,” said AIB chief economist Oliver Mangan.

This new data comes from the latest AIB Ireland services purchasing managers’ index (PMI), a regularly released survey providing information on economic trends.

The survey also showed that transport, tourism, and leisure services posted by far the steepest rate of charge inflation. Although faced with record cost pressures, these services firms increased employment at the fastest rate in seven months in March. This reflected rising workloads, the replacement of earlier pandemic-related layoffs and preparation for the reopening of markets.

The survey also showed strong business activity growth, which reflected a further sharp expansion in new business as demand improved with the continued reopening of markets. Growth eased since February but remained well above the long-run survey trend. Transport, tourism and leisure recorded the fastest growth, followed by technology, media and telecoms.

"There was further strong growth in new business, including exports, while employment rose at its quickest pace since August. The rebound in demand is putting growing pressure on operating capacity, with the volume of outstanding business rising at its fastest pace since 2000. This was also linked to Covid-related staff absences and supply difficulties,” said Mr Mangan.