Inflation at lowest rate in three years thanks to cheaper mortgages
Published 13/09/2013 | 05:00
INFLATION is running at 0.2pc, its lowest rate in three years.
Although the prices of alcohol, cigarettes and education all rose substantially, these increases were cancelled out by falls in the cost of mortgages, furniture, transport and clothes.
Overall, the cost of living rose by 0.1pc in August and is up just 0.2pc in the last 12 months, meaning inflation is a fraction of what it has been in the last two years, new Central Statistics Office figures show.
The most notable increase was a 7.9pc rise for alcohol – with wine lovers worst hit thanks to an 8.6pc hike.
Education costs rose by 4.8pc in the year due to higher third- level charges.
Restaurant and bar prices meanwhile rose by 2.2pc mainly due to higher alcohol prices.
However, overseas visitors coming for the Gathering weren't being "shaken down" as movie star Gabriel Byrne suggested, as the cost of accommodation fell by 0.8pc in the year.
The cost of food and beverages rose by 1.1pc in the last year, though some staples saw much bigger increases.
The price of bread soared by 11.3pc, milk prices rose 4.2pc, and potato prices by 9pc.
There was some relief for motorists as petrol prices are down 3.3pc in the year and diesel is down 4.3pc while overall energy prices are down 0.7pc.
Davy stockbrokers analyst Conall Mac Coille said that inflation was at a three-year low reflecting lower energy and mortgage costs.
The current low inflation rate compares with 1.7pc last year and 2.6pc in 2011.
Mortgage interest costs fell by 5.9pc in the last year thanks to European Central Bank rate cuts.
Mr Mac Coille said that the price of services rose by 2.3pc in the year which was indicative of a gradually growing economy.
Average weekly earnings had also risen slightly this year so falling inflation would help consumers' purchasing power.
However, Merrion economist Alan McQuaid said that weak consumer demand and austerity measures such as the property tax would continue to weigh negatively on spending power and put downward pressure on prices in coming months.