Hikes in airfares and rent push cost of living up 0.1%

The cost of living rose by 0.1% in June driven mainly by the cost of hotels, airfares, and rents.

New figures from the CSO also show that on a yearly basis, prices rose by 0.7% in June compared to the same time last year.

Economists had been predicting that the consumer price index would fall by 0.1% following on from a fall in May of 0.1%.

Hotel and restaurant prices rose 0.5%, while housing, water, electricity, gas and other fuel prices increased by 0.4%.

However the cost of clothing and footwear fell by 2.7%, while furnishings, household equipment, and routine household maintenance prices fell 0.5%. Early summer sales may have caused a fall in these prices.

The low level of inflation will be a cause of worry in Europe, according to Alan McQuaid of Merrion Stockbrokers.

“In light of the eurozone’s wide output gap, reflected in record high unemployment, and the mountain of debt that governments and the private sector still need to pay down, inflation in euroland risks falling uncomfortably short of the ECB’s target of just below 2.0%.

“The downward pressure on prices is especially great in struggling countries on the eurozone ‘periphery’, including Ireland,” he said.

Mr McQuaid said he couldn’t see inflation in Ireland approaching that level at any time in the near future.

“Domestic inflationary pressures in Ireland are likely to remain depressed for some time to come. Continued weak consumer demand will, in general, put downward pressure on prices in the months ahead.

“The austerity measures announced in Budget 2013, in particular the residential property tax, will again hit disposable incomes, which in turn will weigh negatively on spending power,” he said.

He said he could not see Irish inflation rising above 1%.


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