Slowdown in consumer price drop

THE good news for consumers is that prices are still falling; the bad news is that they are falling at the slowest rate for 10 months.

The latest data from the Central Statistics Office (CSO) has shown that while consumer prices fell by 3.9% in the year to January, the fall was the lowest annualised rate in 10 months with prices in general falling by just 0.6% last month, far less than the 1.7% drop in January last year.

Over the last year consumers have benefited from an 8.2% fall in food prices with clothing down 11.2%, furniture down 6.4% and electronics down 13.2%. Overall the cost of living was down 3.9% over the year.

The small business group, ISME, warned however that while some costs are coming down, the price of many state costs are rising.

Opposition politicians echoed these warnings and attacked the Government for failing to rein in state-controlled costs.

The CSO figures show that rail travel increased by 0.3% over the year while bus fares were up 4.4%.

Education costs were also up 11.3% while health costs rose by almost 2% in the year.

Overall insurance costs were also up close to 7%, with house insurance rising by just over 12%. Health insurance is up almost 5% and transport 7%.

While the cost of electricity and gas was down 5% over the year, consumers saw petrol prices increase close to 29%.

These hikes are in addition to the prospect of rising mortgage costs with fears growing that banks will shortly move to hike interest rates.

Yesterday KBC bank, which has 58,000 mortgage customers in Ireland, said it is not ruling out an interest rate hike before the year’s end.

Meanwhile, it has also emerged that AIB credit card customers will see their credit card payment protection insurance increase by 32% from May.

This follows a similar increase in mortgage protection insurance at the end of last year.

The bank is blaming the increased level of claims on the back of rising unemployment rates. On a credit card balance of €1,500 the monthly premium will increase from €9 to €11.85.

Bank of Ireland raised mortgage and credit card insurance late last year but has no hikes planned at present.


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