Workers get boost as wages increase faster than inflation
Published 11/10/2013 | 05:00
WAGES are rising faster than inflation, providing some relief to hardpressed consumers.
The latest consumer price index shows prices rose just 0.2pc in the last year – whereas wages have risen by 1pc.
And Davy stockbrokers said that recent good news in the jobs market indicated a further pick-up in earnings this quarter "providing an additional boost to household incomes in the second half of the year".
However, there's little cause for celebration as the introduction of the property tax this summer is soaking up most of the increased earnings.
The new inflation figures from the Central Statistics Office show prices fell marginally by 0.1pc in September and are up just 0.2pc in the year. That means annual inflation has now levelled off at its lowest level in over three years.
But previously published CSO figures showed private sector wages rose 1pc in the second quarter of 2013 while public sector wages were up 1.3pc.
Earnings have risen around €3 a week. That contrasts with the situation over recent years where the cost of living was rising much faster than wages.
However, the cost of alcohol and cigarettes rose by 4.8pc in the last year and food prices are up 0.5pc.
Clothes and footwear prices rose 4.3pc last month as autumn stock came in, but are still 3.7pc cheaper than a year ago.
Transport prices also fell 2.7pc in the year due to lower petrol and diesel prices and a decrease in airfares.
And while mortgage interest repayments continued to fall, rents are up by 7.5pc in the year.
Alan McQuaid of Merrion stockbrokers said domestic inflation was likely to remain depressed for some time.
"The austerity measures announced in Budget 2013, in particular the residential property tax, have hit disposable incomes hard, which in turn are weighing negatively on spending power," he said.
The Irish Small & Medium Enterprises Association said that the low inflation rate concealed many price hikes including 5.8pc for electricity and 7.6pc for gas.