Cost of living tumbles by 5.9pc in year
SHARP falls in mortgages and rents have sent prices falling faster than at any time since the Great Depression.
Food, clothing, footwear and energy costs all dropped, but the Government was accused last night of presiding over a "parallel universe" as the costs of services it controls, such as health, education and local authority charges, bucked the downward tend and continue to rise.
Employers' body ISME said the private sector had been slashing prices now since late last year, but the cost of public services goes on rising.
Mark Fielding of ISME demanded that the Government immediately reduce the cost of public services or the competitiveness of the country will be damaged.
Yesterday's figures from the Central Statistics Office show that overall prices in the economy dropped back by 0.8pc in July when compared with June.
Mortgage
This took the price fall for the year down to 5.9pc, the largest fall in the history of the State.
Mortgage costs have now dropped by 47.5pc in the past year, following seven cuts in the European Central Bank's main rate.
People on tracker mortgages and most of those on standard variable mortgages have seen their mortgage repayments fall by as much as €500 a month.
The slump in the property market is reflected in a drop of 39.4pc in rental costs in the past 12 months.
Prices for electricity and gas are down 10pc in the past year. This meant housing and energy costs combined were down 27pc in the past year.
Clothing and footware prices fell by 11pc.
But prices for a range of other goods and services headed in the other direction.
Beer prices rose 12pc in the past 12 months; cigarette costs were up 12pc.
House insurance has now climbed by 26pc in the past year, with motor insurance up 13.6pc and health insurance up 21pc.
Economists said that this huge divergence between those goods and services where prices were rising and those where prices were falling meant that everyone had an "individual inflation rate".
Someone with no mortgage and no rent who smoked, liked a drink and was renewing their home and car insurance would be justified in feeling prices were actually rising.
Economist Simon Barry of Ulster Bank said falls in mortgage costs were the biggest factor in the inflation rate falling by 5.9pc in the past year.
If the cost of mortgages wa stripped out, inflation was down 2pc in the past year.
- CHARLIE WESTON
