Irish consumer prices declined 0.7pc in April
Rising unemployment and tax increases have 'heightened consumers' reluctance to spend' (Sami Sarkis/Getty Images)
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Consumer prices recorded a second annual drop in April as the cost of energy, clothes and food declined amid a deepening recession.
Prices based on a European Union measure dropped 0.7 percent from a year earlier after falling at the same rate in March, the Cork-based Central Statistics Office said today. The decline in March was the first annual drop since the data were first collected in 1996. Prices rose 0.1 percent in April from the previous month.
Crude oil has dropped around 60 percent since reaching a record $150 a barrel in July. At the same time, waning consumer demand as unemployment rises has prompted stores to cut prices. Tesco this month said it will reduce prices at some Irish stores by as much as 22 percent.
Rising unemployment and tax increases have “heightened consumers’ reluctance to spend,” Lynsey Clemenger, an economist at Ulster Bank in Dublin, said in an e-mailed note today. “Prices have further to fall, as the consumer strike continues.”
The EU measure excludes mortgage interest payments. Based on an Irish gauge, prices fell 3.5 percent in April from a year earlier, the biggest decline since 1933. The European Central Bank cut its benchmark interest rate by 25 basis points to 1 percent on May 7. It has lowered the rate by 325 basis points since early October.
Clemenger forecasts that prices will fall by an average of 4.3 percent this year, based on the Irish measure.
In the euro area, inflation held at 0.6 percent in April, according to the European Union statistics office, the lowest since that data were first compiled in 1996. (Bloomberg)
- Colm Heatley
