Price slowdown fails to halt rise in cost of living
THE pace of price increases slowed down last month.
Overall the cost of living rose by 2.5pc in December compared with 2.9pc in the previous month, new figures show.
And that was despite a surge in the cost of petrol, home heating and electricity prices.
There were decreases in prices of clothing and footwear, petrol, second-hand cars and mortgage interest repayments.
But hairdressing and health insurance rose, as did tobacco prices. And rents rose in December by 2.9pc compared with the same month last year.
But this week's announcement that the Government is cutting the rent supplement for 96,000 households is expected to see rents fall again this year.
Energy costs are the main factor pushing up the cost of living, with an 11pc surge in household energy bills. Families have seen the cost of electricity jump by about €150 over a year, following a succession of price hikes announced in the past few months, with domestic gas prices also going up.
And petrol prices are also shooting up due to the weakness of the euro against the dollar. Petrol has rise by 7c a litre since Christmas.
But economists said they expected price pressures to ease this year. Another cut in European Central Bank interest rates is expected in the next two months. The 400,000 households with trackers will benefit directly from this, with some of the 250,000 with variable rates also expected to see their payments come down.
Bloxham Stockbrokers economist Alan McQuaid said he expected prices to fall this year despite the rise in the top rate of VAT.
"Continued weak consumer demand will put downward pressure on prices in the coming months, though the indirect tax changes announced in Budget 2012 will add to the consumer price index," he said.
He said that abroad, the main risk to inflation would continue to be energy prices "which could remain elevated due to geopolitical worries".
Retail Ireland (RI) said the latest figures showed the "high level of value currently being offered to consumers in an increasingly competitive retail sector".
RI chairman Frank Gleeson said: "The figures show prices were lower in December for food, alcohol, clothing, footwear, furniture, toys, camera equipment and many other categories."
The CSO also said that the average inflation rate for the whole of 2011 was 2.6pc compared with a fall of 1pc for 2010.
It said mortgage interest costs jumped by more than 20pc during the year, and the cost of home heating oil rose by 24.2pc.
Energy prices rose by 11.9pc, after a 9.6pc increase in 2010. But prices of furniture and household equipment fell 3.2pc last year. Clothing and footwear prices also fell by 1.1pc.