Inflation jumps to 4.9% in January

Ireland’s inflation rate rose by 0.7% in the weeks following the introduction of the euro, according to figures released by the Central Statistics Office today.

The rate of inflation for January was 4.9%, up from 4.2% in December. The sharp rise appears to vindicate a report by the Consumers Association of Ireland which said businesses and retailers had hiked prices to take advantage of the confusion surrounding the euro changeover.

The CSO recorded rises in the cost of doctors’ fees, prescribed drugs and alcohol and without the 11% fall in the price of clothing and footwear during the January sales, the inflation rate could have been significantly higher.

SIPTU has warned that workers could demand compensation because of the high level of inflation.

Manus O’Riordan, a spokesman for the union, said: "If this is not tackled by Government over the next couple of months and you have inflation rising at 5%, you are back to reviewing the promises that were made in the present agreement that inflation would only average 3%.

"IBEC has rejected this assessment and said the main thing pushing up inflation is wages."

Spokesman David Croghan said: "In the service sector we certainly are seeing prices increasing. To a large degree, that is to do with the fact that wages are a much more significant component in services and therefore it reflects to some degree the high level of settlements that were achieved in the last year and that clearly is, if you like, wages pushing prices up."