Airfares and hotels help hike inflation
SOARING summer airfares, costly hotel rooms and higher rents have all helped push up prices.
New figures show increases in the cost of third-level education, higher prices of alcohol in off-licences and supermarkets, and costlier vegetables and meat on the shelves, have all combined to push the cost of living up just 0.7pc in the past year.
However, the increases were largely offset by a fall in costs elsewhere, with transport falling due to dropping prices for petrol and diesel at the pumps, and more competitive pricing on the car showroom forecourts.
In addition, the cost of furnishing houses has also dropped with major sell-offs by furniture salesrooms seeking to shift stock or sell-off as they close their doors.
Mortgage interest rates fell, by 7.8pc over the year, mainly impacted by European Central Bank interest rate cuts delivering lower repayments for tracker mortgage customers. Yet, the cost of heating and servicing a home rose 5.8pc, as people felt the impact of higher gas, electricity and waste disposal charges.
Another factor contributing to the higher costs is a rise in insurance premiums. Insurance firms have been blaming sharp hikes on proposals contained in a new health bill to charge firms if private patients are placed in public beds.
The cost of living increased slightly last month, up 0.1pc, according to the Consumer Price Index (CPI) compiled by the Central Statistics Office (CSO).
Over the past month, the influx of tourists have sent transport costs up slightly by 0.6pc due to peak airfares for the summer months, and hotel rooms prices are up 0.5pc.
Yet, clothing and footwear dropped as the traditional summer sales can be spotted on shopping streets and centres throughout the country.
Inflationary pressures continued to remain "fairly subdued", with a modest increase over the past year, said Alan McQuaid of Merrion Stockbrokers. The annual inflation rate now stands at 0.7pc for the year, up from 0.4pc in May. which was the lowest in nearly three years.
"Continued weak consumer demand will in general put downward pressure on prices in the months ahead," said Mr McQuaid.
"The austerity measures announced in Budget 2013, in particular the residential property tax, will again hit disposable incomes, which in turn will weigh negatively on spending power."
However, he highlighted the main risks to inflation were external factors, particularly the price of energy and food on the global market.
Goodbody economist Juliet Tennent said: "The most significant price rises continue to be in areas impacted by increases in VAT and decreases in Government spending," while Conall Mac Coille, of chief economist with Davy Stockbrokers, said inflation remained weak as households were taking direct hits to their income through PRSI and taxes, rather than VAT increases.