Inflation now lowest in EU as prices ease off
PRICE rises eased off in August for the first time in three months, in a further boost to family finances.
The cost of home insurance, hairdressing and air fares fell, but energy and clothes prices rose, according to inflation figures from the Central Statistics Offices (CSO).
Annual inflation fell to 2.2pc from 2.7pc last month, despite rising variable rate mortgage repayments.
Ireland now has the lowest inflation rate across the EU, based on the harmonised index, which strips out mortgage increases.
Economists expect further falls in inflation this year due to lower VAT and the fact the European Central Bank has reversed its rates-rising policy.
Bloxham Stockbroker's Alan McQuaid said he expected inflation rates to fall further this year due to VAT cuts and a weaker sterling.
But higher energy costs are likely to put pressure on prices: ESB, Bord Gais and Airtricity have all announced hikes in gas and electricity charges.
The CSO said prices rose by 0.2pc in August, but the annual rate fell because there were bigger price hikes in August last year.
Electricity prices increased by 3pc during the month and mortgage costs, which mainly reflect changes in variable rates, have risen by 14.6pc in the past 12 months.
Clothing and footwear rose by 3.3pc during August as summer sales ended.
Transport costs were up 0.3pc, with rises in petrol and diesel prices partly offset by falls in sea and air fares. But home insurance costs dropped by 5.1pc in the month.