Insuring a car over 35% more expensive in year

The soaring cost of insuring a car was the stand-out feature of the latest monthly inflation report.

Car insurance costs showed little signs of cooling. Premiums were up on average 1% in the month, marking an increase of 35.5% from May 2015.

That was the largest annual price surge recorded among a huge list of 53,000 goods and services the CSO continuously tracks to compile its Consumer Price Index.

The CSO figures showed that prices across the economy rose in May from April, by 0.5%, which was the highest monthly rate for 15 months. Nonetheless, the annual rate of inflation was at zero.

Insurance costs have been soaring for almost two years. Insurers and brokers point to high legal and other costs. They have also blamed long-signalled new capital reserves levels to explain the price hikes.

The CSO figures show the cost of insuring a motorbike has also risen, but by a more muted annual rate of 5.8%. Travel insurance has fallen by almost 6% in the year.

According to the CSO, the price of buying a car has fallen by over 3% in the year. The cost of buying a motorbike has risen 3.5%, while buying a bicycle, meanwhile, was about 3% less costly over the same period.

Evidence that petrol costs are climbing again was shown in monthly hikes of around 2%. Petrol prices were still 15.6% lower than May 2015, while diesel prices were about 15.5% less expensive over the same period.

The CSO’s May inflation figures also showed the yawning gap in costs between paying a mortgage and paying rent for a home. Private rents rose again in May by a significant monthly rate of 0.5%, and are 9.7% more expensive than in May 2015. In contrast, mortgage interest costs fell 0.5% from April, and are now over 8% less expensive than May last year.

Business group Isme said the inflation figures do not adequately capture all the costs facing many businesses. Chief executive Mark Fielding renewed his call on the Government to monitor price rises which specifically hit firms.

Irish businesses remain vulnerable because Ireland is a high-cost economy where “consumer prices are 20% above the euro area average”, said Mr Fielding.


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