More pain as rising mortgage and fuel costs drive up cost of living
Published 11/02/2011 | 05:00
THE cost of living is rising faster than at any time since 2008.
Despite the winter sales, soaring mortgage and fuel costs are driving up prices, which are now 1.7pc higher overall than a year ago.
Although prices dipped slightly by 0.2pc in January, home loan and energy hikes contributed to a rise in annual inflation, which has been positive for six months in a row.
The sales-related fall in January prices was lower than the same month last year, the latest Consumer Price Index from the Central Statistics Office shows.
Higher mortgage repayments are a huge element of increased costs to consumers, as these are up 24.1pc in a year, with many householders set to feel the impact of further interest hikes announced this month.
Clothes and shoe prices fell by 9pc in January, while furniture and household equipment fell by 2.6pc.
However, health costs rose by 3.3pc thanks to increased hospital charges.
Petrol prices rose by 2.1pc in the month and are up 14.8pc on a year ago, while diesel prices rose 2.3pc in January and are up 17.7pc.
Alcohol prices also rose by 3.5pc in January. Food prices are just 0.3pc higher than a year ago, but some staples rose sharply last month such as tea (+4.6pc), lamb (+3.8pc), eggs (+2pc) and fruit (+1.9pc), although jam, cocoa, pork, cakes, coffee and cereal prices fell.
The trade union movement said continuing price increases undermined the Government's claim that welfare and pay cuts could be justified by falling inflation. "People are now being squeezed between the pincers of falling pay and remorseless price rises. Yet the Government continues to attack people's incomes," Irish Congress of Trade Unions' (ICTU) economic adviser Paul Sweeney said.
Experts also warned rising hospital costs would push up inflation over the coming months as health insurers pass these on to their customers.
And rising world commodity prices could push Irish inflation higher than the 1pc previously predicted for 2011.
"In fact it now looks like it will be closer to 2pc than 1pc, putting more pressure on the disposable income of hard-pressed consumers," Bloxhams analyst Alan McQuaid said.
Employers' group IBEC expressed concern that public sector costs were adding so much to inflation, as hospital services jumped by 10pc during January.
"Despite the return to inflation, average prices remain 6pc below where they were prior to the crisis," IBEC economist Fergal O'Brien said.