Fuel and interest-rate rises drive inflation up to a three-year high
INFLATION has risen to a three-year high and soaring petrol prices and mortgage-rate increases will continue to drive up the cost of living.
Inflation is now at 2.2pc, with prices up by 0.8pc in February alone -- the biggest increase since 2008 -- even before petrol prices shot to €1.52 this week.
The higher cost of living is putting "impossible pressure on working people" who face further rises in mortgage interest rates and oil prices, trade unions warned yesterday.
Pressure mounted on the new Government yesterday to take urgent action to reduce high taxes on petrol. Petrol prices rose by 16.4pc in the past 12 months, while diesel is up 19.7pc and home heating oil is up 37pc, the Consumer Price Index for February from the Central Statistics Office (CSO) shows.
But those increases predate the impact of the ongoing turmoil in Libya pushing up world oil prices, with the fallout felt by motorists nationwide this week.
Nor do they include rail price increases of 3pc which hit commuters last week.
The Irish Congress of Trade Unions economic adviser Paul Sweeney said Irish prices had risen for seven months in a row, and were already 26pc higher than the EU average, putting impossible pressure on working people. "And we can now expect further increases in interest rates and commodity prices along with the proposed rise in VAT," he said. The CSO figures show the biggest price rises were for clothes and footwear, up 6.5pc since the January sales period. Food prices rose by 0.7pc in February, and increased 1.2pc in the past 12 months.
And the cost of mortgage interest repayments -- which have risen 20.3pc in the past year -- has also hit householders hard, with the prospect of a rate hike by the European Central Bank next month that would affect all variable and tracker customers. Housing and utility costs have been the biggest driver of inflation in the past year.
This is with the exception of rents, which have stabilised in the past year. Higher transport and health costs have also put the squeeze on consumers.
But higher oil costs will have a knock-on effect across the economy, as increased transport and manufacturing costs add to the price of everything from food to clothes and even holidays. Most of the 2.2pc inflation rate was down to external factors like oil, and the Irish economy was continuing to close the competitiveness gap with the rest of Europe.
The Department of Finance said there were no plans to reduce excise rates on fuel.
"While taxation measures do contribute to petrol prices, the current spike in oil prices is the result of international events, largely the uncertainty about Libya" a statement said.
EU leaders, including new Taoiseach Enda Kenny, will be discussing the issue of Libya at the European Council meeting in Brussels today.