Inflation rises

The cost of living increased in August, official figures revealed today.

The consumer price index showed that goods and services rose by 0.7%, with education, utility bills, housing and telecoms charges seeing the biggest hikes.

Prices have gone up 0.2% in the last year, the Central Statistics Office said. This is the first time since December 2008 that prices have increased on an annual basis.

Employers' group IBEC said that while the return to inflation was expected, prices in some sectors remain too high and need to fall back in line with those of our competitors.

"Prices are now rising again, but the spare capacity in the economy will ensure that inflation in coming years will be fairly moderate, " IBEC economist Reetta Suonperä said.

"Price levels are likely to remain below the 2008 peak until 2013.

“Although Ireland has made headway in improving its competitiveness, prices in some sectors remain too high and need to fall back in line with those of our competitors,” concluded Ms Suonperä.

The Small Firms Assocation (SFA) described as 'worrying' the fact that, for the main part, inflation is being driven by increases in public utility costs, such as education (9.5% increase), housing, water, electricity, gas (7.9% increase) and transport.

"These costs are daily input costs for businesses," said SFA director Avine McNally.

"Government now needs to urgently tackle the issue of costs. When costs are passed on to the rest of the economy, competitiveness and jobs are lost and businesses close,” she added.

That call was echoed by the Irish Small and Medium Enterprises association (ISME).

“The future of thousands of smaller businesses lies in the hands of Government, who have failed to recognise the difficulties faced by these companies," said ISME chief executive Mark Fielding

"This is evidenced by the significant charges for commercial rates, local charges, transport and energy costs, which exceed those charged by our international competitors. Additional charges, in the form of carbon taxes and energy levies, are crippling, and will lead to further company closures and job losses”.

“There needs to be recognition by Government that cost competitiveness is crucial to the future of business and the future of the economy," Mr Fielding concluded.