Fuel and education bills rise despite overall fall in prices
Increase in state-controlled costs hurting businesses -- ISME
STATE-influenced costs are continuing to rise even though overall prices fell by 3.1pc over the past year.
Prices controlled by the Government increased by up to 9pc as energy, education and transport costs flew in the face of the overall trend of price deflation.
Business group ISME warned the Government it should "take the opportunity to regain competitiveness while inflation remained in negative territory" with a root-and-branch review of government costs.
There were small glimmers of light for beleaguered Finance Minister Brian Lenihan yesterday, as the Consumer Price Index rose for the second month on the trot and manufacturing output rose by more than 13pc.
And the Central Bank also said that the economy was likely to start growing again in the second half of the year at a "modest" pace, but it warned that lower incomes and high unemployment were likely to hold back consumer spending.
Davy stockbrokers said that most domestic prices were still falling because of weak demand.
But energy costs over which businesses and consumers had no control were the main driver of price rises.
Fine Gael accused the Government of hammering consumers and businesses with higher charges such as energy costs up by 9.1pc, education costs up 8.7pc and transport costs up 5pc.
"The CSO figures reveal that areas of the economy controlled and regulated by the Government have seen consistent inflation, even when the rest of the economy has been getting cheaper. This cannot continue," said the party's innovation spokesperson Deirdre Clune.
Dental charges were also up by more than 14pc last month, as a result of the Government's severe cuts to the PRSI-subsidised dental scheme.
The Irish Dental Association called on new Social Protection Minister Eamon O Cuiv to reverse this "stealth tax", which it said would damage the nation's health.
However, there was some good news for parents as the Government's new free preschool scheme resulted in a 10pc fall in childcare costs.
The CSO figures show that overall prices nudged upwards by 0.1pc in March, following a 0.4pc rise in February, the first time since 2007 that the index has risen two months in a row.
Analysts predicted that prices would fall by between 1pc and 2pc this year, and it would be 2011 before the annual inflation rate increased again.
But soaring fuel prices contributed to the rise -- petrol and diesel prices were up more than 24pc in the last year, and up by more than 2pc in the last month alone.
The annual inflation rate is now falling at its lowest rate in a year, as it stands at -3.1pc.
Ibec's Retail Ireland said the huge price falls seen for shop-bought goods such as food (-8pc), clothes (-14pc), furniture (-8pc) and electronics (-12pc) showed how retailers had slashed prices continuously to save their businesses.
"Retailers have cut their overhead costs to the bone. Their ability to deliver further price cuts to consumers depends on the willingness of landlords to reverse huge rent increases," said Ibec Director Torlach Denihan.
And Irish prices were still falling strongly compared to the rest of Europe, and this was particularly noticeable for food, where UK consumers saw a 1pc increase.
"The grocery sector is certainly one area where Irish consumers are benefiting in the current deflationary environment, mainly due to the highly competitive nature of the industry," said Goodbody Stockbrokers economist Deirdre Ryan.